A loan guarantor is someone who agrees to repay a loan if the borrower defaults. Being a loan guarantor is a serious responsibility, and there are several requirements that must be met in order to qualify.
What are the requirements of a loan guarantor?
- Be at least 18 years old
- Have a good credit score
- Have a stable income
- Be a UK resident
- Not be bankrupt
In addition to these requirements, some lenders may also require guarantors to provide security, such as a property or savings account.
What are the risks of being a loan guarantor?
There are several risks associated with being a loan guarantor, including:
- Losing money If the borrower defaults on the loan, the guarantor will be responsible for repaying the debt. This could result in the guarantor losing money.
- Damaging your credit score If the borrower defaults on the loan, it could damage the guarantor’s credit score. This could make it more difficult for the guarantor to get credit in the future.
Should I become a loan guarantor?
The decision of whether or not to become a loan guarantor is a personal one. There are both risks and benefits to consider. Before you make a decision, it is important to weigh the pros and cons carefully. Here are some questions to ask yourself:
- Do you know the borrower well?
- Do you trust the borrower to repay the loan?
- Can you afford to lose money if the borrower defaults?
- Are you comfortable with the risks involved?
If you are not sure whether or not to become a loan guarantor, it is important to seek professional advice.
Conclusion
Being a loan guarantor is a serious responsibility. Before you agree to become a guarantor, it is important to understand the requirements and risks involved.
