Being a Guarantor - FAQs
- I have been asked to stand as a Guarantor on a loan, what does that mean?
- By standing as Guarantor you are agreeing to take responsibility for the loan if the applicant fails to keep to the agreed repayments. If the loan is paid on time you will have to do nothing more than be involved in the application process, however you should not agree to stand as Guarantor unless you are completely comfortable with the idea that you may have to make repayments if the applicant does not.
- Do I meet the criteria to be a Guarantor?
- Do you know the applicant well?
- Are you a UK homeowner?
- Are you aged between 23 and 67?
- Do you have a good credit history, with no CCJs or defaults?
- You need to have an income of at least £800 per month (shown on a bank statement no more than 3 months old).
- What is involved in the application process?
- You should have been given a pink form to complete and sign. This is the 'Guarantee and Indemnity' form where you give your consent to act as Guarantor. On this form there is also a Direct Debit Mandate, which must be completed and signed by you. The pink form should be sent back to the lender together with the blue form that is completed by the Applicant.
- Both Guarantor and Applicant also need to include bank statements, passport/driving license photocopy, and debit card front/back photocopy.
- Direct Debit may be used to collect money from you in the event that payments are missed by the applicant.
- Why do you need Direct Debit/ debit card?
- As a guarantor you are responsible for meeting repayments in the event that the applicant defaults on a loan. The lender may use the debit card details or the direct debit to collect the payment from you in the event that it is impossible for them to collect from the applicant.
- Will the lender keep in touch with me to let me know how the loan is being handled?
- Yes, the lender will send you monthly statements so that you know that the loan is being repaid correctly. If there is a problem they will also contact you by telephone, text or mail.
- Can I act as a Guarantor for more that one loan with you?
- No, if you are already standing as Guarantor for one no-credit-score loan you cannot stand as Guarantor for another until the first has been paid off.
- Can I change my mind about being a Guarantor?
- You can change your mind about being a Guarantor at any time until the loan has been paid out. When the loan is paid out it will be paid out into your bank account. It is then your responsibility, as the Guarantor, to pass the money on to the Applicant. Once you have done this you cannot change your mind about being the guarantor and will be responsible for the repayments on the loan and any other charges until the loan has been paid off.
- Can the loan be paid off early?
- Our lender is completely flexible about this issue. The borrower can make overpayments and either reduce their payment period or skip payments in the future. The only thing they insist on is that the borrower make at least the normal monthly payment agreed to on their application form.
- How will the lender deal with the information that they hold about me?
- Our lender is regulated by the Information Commissioner's Office under the Data Protection Act. They will always treat your information in a secure and confidential way.