How easy is it to get car finance with a guarantor?
A guarantor loan lets you add another person to your finance agreement, to take on your finance if you’re unable to pay
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Not all car finance companies offer guarantor loans these days, but with this type of loan, you nominate someone to be your guarantor and they’ll be responsible for making your payments if you’re unable to.
It’s important that you pick someone trusted – and who knows exactly what it entails – to be your guarantor, and bear in mind they will feel the consequences if you don’t pay your debt. Leaving another person having to repay your car finance is a sure-fire way to put stress on any relationship!
What are guarantor loans for car finance?
Guarantor loans for car finance are a type of loan that lets you add on another person to your contract as an added security blanket. This person will be responsible for repaying your car loan if you don’t keep on top of payments.
These types of loans are a good option for people with poor or incomplete credit history, as it gives the lender peace of mind that somebody else will repay the loan if you don’t. Your guarantor can be any person over the age of 18 who has a good credit history and the ability to take over your loan if needed. Owning a house is an indicator of a good guarantor, and this person must not be somebody you’re already financially linked with.
Can you get car finance with a guarantor?
You can get car finance with a guarantor, but you’ll need to make sure the finance company offers this.
You’ll probably find that guarantor car finance is not as common in recent years, but there are still some lenders out there that work with guarantor loans.
Here at cinch, our finance providers don’t offer guarantor loans, but we do have other options for spreading the cost of your car.
Why do I need a guarantor for car finance?
You might need a guarantor for car finance if you know that you’re likely to struggle to get approved if you apply by yourself.
This could be if you’re just starting out and don’t have much credit history for lenders to look at, or if you have a poor credit score and don’t look attractive to lenders.
There are other ways that you can improve your chances of getting approved for car finance if you don’t have the best credit report.
Putting down a large deposit and applying to borrow less from the finance company could make you a more attractive borrower, for example.
Can you be rejected as a guarantor?
If you’re applying to be somebody else’s guarantor, there's a chance your application could be declined if you don’t match the lender’s criteria.
Most lenders will have some guidelines for what makes an ideal guarantor, so it’s a good idea to take a look at these beforehand.
If you’re applying for a loan with a potential guarantor who also has poor credit history, you’re usually less likely to be accepted.
You’ll need them to have a high credit score to increase their chances of being approved.
Do you get credit checked to be a guarantor?
Before being accepted as a guarantor, you'll usually undergo a hard credit check and affordability assessments to see if you’re suitable for the loan.
If the car finance is paid in line with the terms of the contract, then nobody will see their credit score affected. However, if the borrower misses payments, this is when your score could start to take a beating.