Guarantor Loans

Your rights

If you've been sold guarantor loans in the UK and you want to know about your rights, check out our comprehensive guide.

Can I find low apr guarantor loans?

Since guarantor loans are a form of high-cost credit, you're unlikely to find guarantor loans at a low apr. This means that a guarantor can end up facing expensive repayments!

Guarantor loans are genuinely sold to borrowers in the UK with bad credit. They're often a last resort – and lenders know that guarantors will frequently end up paying.

Most complaints we see at Resolver are about affordability. If you've borrowed or guarantored a loan that was unaffordable, read on for your rights.

Guarantor loans for borrowers

Was your loan mis-sold?

Guarantor lenders should always check to make sure you'll be able to repay a loan on time without borrowing more or falling behind on bills.

Lenders should always ask about your income and living expenses (including bills, rent/mortgage and council tax).

If you've found that you've been:

• struggling with living expenses;
• borrowing to pay off a guarantor loan; or
• topping up your loan over and over again;

Your loan may have been unaffordable.

You can make a complaint if:

• you're still paying the loan.
• you've stopped and your guarantor is having to pay.
• the loan has been repaid.

If your loan was unaffordable, you’re due a refund of any interest you’ve paid (plus 8% statutory interest). The refund will go to you or your guarantor (if they’ve had to make some payments).

If you’re still repaying a loan, you’ll only have to repay what you borrowed. You won’t have to pay any interest. The lender should work out an affordable repayment plan with you.

The complaint itself won’t affect your guarantor. They shouldn’t be told that you’ve complained.

However, if you stop making payments, the lender might get your guarantor to pay. If you don’t want this to happen but can’t afford to keep making repayments, it’s best to talk to a debt adviser about your options.

If the lender has started court action, it's very important you get advice. It should be possible to get any court action put on hold while your complaint is considered by either the lender or the Financial Ombudsman. We suggest you go to your local Citizens Advice for help.

If you don’t want your guarantor to be informed, it’s best to include a line saying that you want to carry on making your normal monthly payments because you don’t want your guarantor to be affected in any way by your complaint.

Guarantor loans for guarantors

The person I was guarantoring has stopped paying – what are my options?

If you're the guarantor for a loan and the borrower has defaulted on their repayments, the lender can ask you to pay. If you've signed as a guarantor, you're liable. If you refuse to pay, the lender may start enforcement action and your credit rating will be affected.

Can I be removed as a guarantor?

Guarantor lenders should always check to make sure that both you and the borrower are able to repay a loan on time without borrowing more or falling behind on bills.

You can ask to bhe removed as guarantor if:

• The loan was unaffordable for the borrower.
• You couldn't afford to repay the loan without difficulty when the loan was taken out.
• You were pressured into becoming the guarantor
• The lender didn't explain the implications of being a guarantor.
• You had other financial links with the borrower (for example, if you share rent payments or car finance) that weren't taken into account by the lender when affordability was assessed.
• It wasn't made clear to you that the loan was a top-up loan and that you would be responsible for the entire loan (not just the top-up).

If you're removed as a guarantor, the loan will turn into a "normal" loan.

Any payments you've made as the guarantor should be refunded.

Any marks on your credit record should be deleted.

Start your guarantor loans complaint now