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What Is Guarantor Car Finance?

May 12, 2016

Buying a car is often an expensive business – and buying a car on finance can prove tricky with a bad credit score, or on a lower income. Guarantor car loans are an ideal option for people with a less-than-perfect credit rating – and the best part is they’re surprisingly easy to apply for. Guarantor loans require a third party, whether that’s a friend or family member, who’ll vouch for you and guarantee to take responsibility for your loan – should you falter on your repayments.

Today, we’ll take you through the ins and outs of applying for guarantor loans online, helping you to get approved and on the road in no time at all.


What is guarantor car finance?

When approving finance applications, lenders look for reassurance that the loan will be repaid. Applicants with a good credit history present a lower level of risk, as they’ve previously demonstrated their ability to make repayments on time. Things get a bit more difficult for those with poor or bad credit scores, as these higher-risk borrowers are (in theory) more likely to falter on repayments.

Applying for car finance with a guarantor is an ideal way for bad credit holders to become low-risk applicants – as a friend, family or colleague can guarantee to meet your repayments if you can’t. The guarantor takes financial responsibility for the loan and is directly paid the initial loan, before releasing the funds to you. As the borrower, it’s your responsibility to repay the loan to the lender – but should you default on the loan, the guarantor will have pre-agreed to make these repayments in your place.

Do I need a guarantor for car finance?

Naturally, these schemes aren’t for everyone – as applicants with good credit scores are unlikely to struggle to find approval, and will likely be better off taking full financial responsibility for their own loan. However, for applicants who’ve found it hard to get approved for a loan, guarantor car finance may be practical.


Are bad credit holders really eligible for guarantor loans?

Loans for bad credit holders with no guarantor and no fees are virtually impossible to find, but flexible car finance deals are available to applicants in a variety of financial situations – especially if you can find a friend or family member willing and able to vouch for you. As long as your car finance guarantor has a reasonably good credit history, it’s likely you’ll be eligible. This loan will provide an opportunity to rebuild your credit score, too – so for people with bad credit, car finance with a guarantor can be a great way of rectifying a bad rating. And the best bit? In spite of your credit history, a guarantor makes you less of a financial risk to the lender – so your APR rate may be lower than you’d otherwise expect.

Do you offer guarantor loans for non-homeowners?

Whilst non-homeowners aren’t eligible for loans secured against their current property, there are still a number of car finance options available. Thanks to the flexibility of guarantor loans, non-homeowners can find approval and guarantee that the lender will receive the repayments.

Provided that your guarantor’s credit history and current financial situation are reasonably good, it may even be possible to secure a loan with a non-homeowner guarantor. The size of the loan will affect whether this is possible – so using a car finance calculator can help you to determine whether this is a viable option.

Can I apply for guarantor loans online?

It couldn’t be simpler to apply for guarantor loans online. Look for a car finance quote, with or without your guarantor’s personal details, to help you decide whether this is the right route for you.

When you’re ready to commit, the lender will give both parties a copy of the credit agreement (discussing the payment schedule) and a guarantee contract. Ensure the contract is signed within fifteen days for a successful settlement between the three parties. If the guarantor provides a ‘secured guarantee’, they may be repossessed if the loan cannot be repaid. Think carefully about what you list – and never list any item worth more than the debt.

It may also be a good idea to create a written agreement between the borrower and guarantor, to ensure both parties are kept informed about the borrower’s financial situation regarding repayments.


With The Car Loan Warehouse, it’s not a problem if you have bad credit history, your income doesn’t meet the usual criteria, or you’re unable to secure a loan against your home.

Whatever your financial situation may be, our guarantor scheme means it isn’t the end of the road for car finance options. Apply for guarantor car finance online now – or if you’re not ready to commit just yet, try out our car loan calculator for a free online quote.

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About The Author

Jon Le Roux is co-founder and company director of The Car Loan Warehouse. Being a mad engineering and motorsport enthusiast, I spend more hours than is healthy, watching, reading or talking about cars, boats, motorbikes…..basically anything with an engine.