Should I Be A Guarantor? Everything You Need To Know Before Saying Yes
Thinking of helping a friends or family member get vehicle finance by becoming a guarantor? It’s a generous act- and often the only way someone with poor credit or no credit history can get the vehicle they need. But it’s also a serious financial responsibility.
At Motor Loans R Us, we help people across the UK access vehicle finance, including guarantor loans. In this post, we’ll explain what being a guarantor involves, the benefits, risks, and everything you need to consider before agreeing.
❓What does it mean to be a guarantor?
A guarantor is someone who agrees to ‘guarantee’ another person’s financial agreement. This means if the borrower cannot make their repayments, for any reason, you are legally responsible for stepping in and paying instead.
This gives lenders added security and often makes it possible for borrowers to be approved, even if they have:
- Poor credit
- No credit history
- Unstable income
In short, you’re vouching for their ability to repay and committing to cover repayments if they don’t.
✅ What are the benefits of being a guarantor?
Being a guarantor can be rewarding in the right circumstances. You could help someone:
- Get the vehicle they need for work, education, or daily life
- Improve their credit score through consistent repayments
- Access better interest rates than they’d get along
- Gain independence without relying on high-cost credit
It can be especially meaningful if you’re supporting:
- A young adult getting their first van or car
- A family member rebuilding after financial difficulty
- Someone trying to launch or grow their business.
⚠️ Key Responsibilities and Risks to Know
Before agreeing, make sure you understand what being a guarantor really means.
💷 You’re financially responsible if they can’t pay
If the borrower misses payments, the lender will turn to you. You’ll be expected to cover:
- Missed repayments
- Late payment charges
- In extreme cases, the full remaining balance
🕵🏼 Your credit will be checked
Guarantors undergo a credit check. if your credit file shows poor history or unstable finances, you may not be accepted.
📊 It can affect your credit
If the borrower defaults and you can’t pay either, your credit score will suffer too. Missed payments or court action will appear on your file
🏡 Your assets may be at risk
In some cases, lenders may require guarantors to be homeowners. If court action is taken for unpaid debt, your home could be at risk, although this is rare and only happens in severe cases.
👤 Who can be a guarantor?
You don’t need to be related to the borrower, but you do need to meet certain criteria. Most lenders will expect a guarantor to be:
- Aged 21 or over (some require 25+)
- A UK resident with proof of address
- Financially stable
- Employed or have a regular income
- Someone with a strong credit history
- Often a homeowner (though not always required)
🎙️Things to discuss before agreeing
It’s important to have an honest conversation with the borrower about:
- Why they need the finance
- Whether they can realistically afford it
- What their monthly payments will be
- What your backup plan is if something goes wrong
You should also make sure you’re happy with
- The amount being borrowed
- The term of the agreement
- Your own ability to step in if needed
🤨 Common Questions about being a guarantor
Potentially. Even if you’re not making the payment, lenders may see the agreement as a financial commitment, which could affect your borrowing capacity.
No, once the agreement is signed you’re legally bound until the finance is repaid in full, unless the lender agrees to release you (which is rare).
Yes, lenders will usually contact the guarantor if payments are missed. Acting early is key to avoiding added charges or damage to your credit.
💭 Should you say yes?
Becoming a guarantor is a generous way to help someone move forward, especially when they’re trying to build a better future. But it’s a decision that should never be taken lightly.
Ask yourself
- Can I afford to cover the repayments if needed?
- Do I trust the borrower to be financially responsible?
- Am I comfortable committing to this for several years?
⚖️ Still unsure?
Have questions about being a guarantor for vehicle finance? Our friendly team at Motor Loans R Us can guide you through the process, help you understand the risks, and explain everything clearly – no pressure, no obligation.