Guarantor car finance
If you’re struggling to get car finance on your own, guarantor car finance could be an option for you. Read more about what guarantor car finance is and how it works below.
What is guarantor car finance?
Guarantor car finance is a type of car finance where someone else (the ‘guarantor’) agrees to step in and make your repayments on your behalf if you encounter difficulties in paying your car loan. In every other way, it is much the same as any other kind of car finance, just with an added safety net.
While guarantor car finance is not that commonplace these days, it can be beneficial if you have a poor credit history. This option can help you get approved for car finance more easily. In most cases,
people consider applying for car finance with a guarantor in the following situations:
If you are a young driver with no credit history
If you have bad credit and are unable to get approved for a loan by yourself.
Remember that if you fail to make payments, it can negatively affect both your credit and your guarantor’s credit scores. Therefore, it’s important to choose a guarantor who understands the responsibilities and is financially capable of covering the payments in case you can’t. Always communicate openly with your guarantor and the lender to ensure a smooth car finance experience.
With Oodle, you can easily check if you qualify for car finance without a guarantor. Apply now
If you need a guarantor to get car finance, you can easily follow these steps:
01
Find a reliable guarantor with good credit
02
Research and choose a lender that offers guarantor car finance
03
Prepare necessary financial documents, such as proof of income, employment details, and identification
04
Apply for car finance with the chosen lender
05
The lender will conduct a credit check on both you and your guarantor
06
Review and sign the loan agreement
07
Make timely payments to build your credit
A guarantor is usually a close friend or family member who can afford to cover the repayments should you suddenly find yourself unable to. It gives lenders an extra layer of security to know that their loan is safe should you fall into difficulty.
Choosing a guarantor can be tricky. It’s a big financial commitment based on trust, so having a good relationship with any potential guarantor is vital. Generally, most guarantors tend to be parents supporting their children or other close family members or friends.
Similarly, if you have been approached to be someone’s guarantor, don’t feel pressured into doing so and never agree if you are not completely sure you can make the repayments in a worst-case scenario.
To qualify to be a guarantor, you must have a good credit history and a separate bank account from the borrower. Most lenders prefer guarantors to be over 21 and under 75, and many insist on
homeowners guarantors. If you agree to become a guarantor, you will need to provide:
Employment history details
Name, address, telephone number
Credit rating
Loan and debt management history
Details of any other guarantor loans you may be involved in.