Please note: Post Office doesn’t offer guarantor loans. This guide explains how they work so you can understand the risks and responsibilities.
If you need to borrow money, you may be eligible for a Post Office Personal Loan. You can check your eligibility without affecting your credit score.
Post Office Personal Loans are provided by Lendable. Post Office Limited is a credit broker and not a lender1
In this guide
If you’ve struggled to get accepted for a personal loan or you don’t have much credit history, you may have seen the term guarantor loan.
A guarantor loan is borrowing that’s supported by someone else, called the guarantor. They don’t get the money themselves. Instead, they promise to step in and make repayments if the borrower can’t.
For the borrower, a guarantor loan may make it easier to apply when a lender wants extra reassurance. For the guarantor, it means taking on legal responsibility for the debt if things go wrong.
Before either person agrees, both need to understand the loan terms:
As with other personal loans, the borrower applies for money and agrees to repay it over a set time, usually through monthly repayments. With a guarantor loan, another person is added to the agreement as the guarantor.
Although lenders have their own processes, getting a loan with a guarantor often works like this:
A guarantor is usually someone the borrower knows well and trusts. This could be a family member or close friend.
Lenders set their own rules, so there’s no single answer to who can be a guarantor. In general, a guarantor may need to:
Some lenders may ask for proof of income. Some may prefer, or require, a homeowner. Others may accept a renter, pensioner or retired person if they pass the checks.
A guarantor should never feel pressured into agreeing. If you’re thinking of asking someone, give them time to read everything, ask questions and say no if they’re not comfortable.
Yes, guarantors usually get credit checked.
The lender needs to decide whether the guarantor could repay the loan if the borrower can’t. They may also check identity, income, affordability and bank details.
Some lenders may run a soft credit check at the start. This doesn’t affect the guarantor’s credit score and isn’t visible to other lenders. The lender’s own process should make clear what kind of check they’ll run and when. If you’re unsure, ask before agreeing.
Being a guarantor doesn’t usually affect your credit score if the borrower pays on time and the loan runs as agreed. But it can if they miss payments and you have to pay for them.
If missed payments continue or you as the guarantor can’t pay when asked, this may be recorded on your credit file. That can make it harder or more costly to borrow in future.
Being a guarantor may also be considered in future affordability checks, such as if you apply for a mortgage, because it’s a financial commitment you may need to cover.
A guarantor loan may be worth considering if you can afford the repayments but don’t meet a lender’s criteria on your own. But it’s not a shortcut to borrowing more than you can manage.
Before applying, check:
It may not be right if you’re already struggling with bills, the repayments would stretch your budget or either person feels pressured or unsure.
Yes. Many personal loans don’t need a guarantor. If you meet a lender’s criteria on your own, you may be able to apply without asking someone else to support your application.
The lender will look at your income, outgoings, credit history and affordability. The best option depends on why you need to borrow, what you can afford and what you’re eligible for.
If you don’t want to involve a guarantor, or you can’t find one, you could consider:
If the borrower misses a payment, the lender will usually contact them first and ask them to pay quickly. If they can’t pay, the lender may ask the guarantor to cover the missed payment or more of the loan, depending on the agreement.
If payments still aren’t made, the lender may pass the account to collections, take legal action or record missed payments on credit files.
If you’re struggling to repay, contact your lender early. You can also get free debt help from MoneyHelper, StepChange or National Debtline.
A guarantor usually can’t simply stop being a guarantor once the loan is active.
That’s why it’s important to understand the agreement before signing. Don’t assume you can withdraw later if your circumstances change.
A guarantor may only be released if:
If you’re being asked to be a guarantor, read the agreement carefully and ask the lender what your options would be if your circumstances change.
You may be able to if both you and your guarantor meet the lender’s checks. These usually include identity, affordability and credit checks. The guarantor must also understand that they may have to repay the loan if you can’t.
No. The name can be misleading. A guarantor doesn’t mean approval is certain. The lender still checks the borrower and guarantor before deciding.
Some lenders may accept a pensioner or retired person as a guarantor if they meet the lender’s criteria and can afford the repayments.
It may help some people apply for car finance, but car finance can work in different ways. Check whether the loan is secured against the car, who owns it during the agreement and what happens if payments are missed.
Some lenders may allow more than one guarantor, but many only accept one. It depends on the lender’s rules and the type of loan.
It can. A lender may consider your guarantor commitment when checking affordability, because you may need to make repayments if the borrower can’t.
You might be able to, but the lender will look at your existing borrowing and decide whether you can afford to cover another person’s loan if needed.
A guarantor usually can’t withdraw just because they change their mind. They may only be released if the loan is repaid, replaced or changed with the lender’s agreement. Always check the lender’s terms before signing.
Only if the lender agrees. The new guarantor would normally need to pass the lender’s checks and sign a new agreement or change to the existing one.
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1If you take out a loan, Post Office receives a commission payment from Lendable. You can ask Lendable for details of any commission paid to Post Office for your loan.