Car finance without guarantor, and what a guarantor car loan commits each person to

What each side takes on in a car loan with guarantor

1. The guarantor is liable for the whole agreement. Not for a share, and not only for missed payments. If the agreement defaults, the guarantor can be asked for the outstanding balance in full. They should read the same documents the borrower reads, including the total amount payable and what happens on termination.
2. It appears on the guarantor's credit file. A guaranteed agreement is usually recorded on the guarantor's file and counted as a commitment when they apply for their own credit. A parent who guarantees a car may find it reduces what a mortgage lender will offer them, which is a cost worth naming before anyone signs.
3. Most applicants do not need one. Guarantor products sit at the expensive end of the market and exist for files that cannot otherwise be placed. Before asking a relative to sign, check whether a larger deposit, a cheaper car or a different lender clears the application on its own. Frequently one of the three does.
4. The relationship is the real exposure. The financial terms are recoverable; the arrangement between two people usually is not. If the agreement is one a guarantor could not comfortably take over and pay themselves, it is the wrong agreement regardless of what the lender will approve.

Being a guarantor for car finance: what the person signing actually takes on

A guarantor is agreeing to pay the whole balance if the borrower does not, and the commitment is not limited to the missed instalment. It appears on the guarantor's credit file, it counts against what they can borrow themselves while the agreement runs, and it survives the borrower's change of circumstances.

Before signing, ask for the total amount payable, the term and what the lender will do before it calls on you, and read whether the guarantee is for that agreement alone or for anything that replaces it. A guarantor who is asked for the balance is being asked for the balance, not for help with a payment.

Common questions

Who can be a car finance guarantor?

Usually someone over twenty-one with their own good credit history and provable income, often a homeowner. Most lenders will not accept a guarantor who lives at the same address or is financially linked to the borrower.

Car finance bad credit no guarantor: can a poor file be placed without one?

In most cases yes. Guarantor agreements are a small corner of the market, and a poor file is far more commonly placed with a subprime lender on a deposit than with a guarantor.

Can a car loan guarantor be removed later?

Not usually from the existing agreement. The normal route is to settle it and refinance in your own name once the payment history on it has improved your file enough to be accepted alone.

What happens to the guarantor if the car is returned?

Handing a car back does not necessarily clear the balance. Where a shortfall remains after termination or voluntary surrender, the guarantor is liable for it in the same way they were for the payments.

Are guarantor car loans worth it if a deposit would do?

Often not. Guarantor products sit at the expensive end of the market and exist for files that cannot otherwise be placed. Before asking a relative to sign, check whether a larger deposit, a cheaper car or a different lender clears the application on its own; frequently one of the three does.

Browse by check type

• Compare Full car check on advertised prices
• Compare Basic car check on advertised prices