Guarantor Car Finance

£8,000
48 Months

48 monthly repayments

£356.94

Best available rate 6.9%

Total cost of credit £1,069.12

Total repayment £8,569.12

48 monthly repayments

£356.94

Best available rate 6.9%

Total cost of credit £1,069.12

Total repayment £8,569.12

Representative example:

Borrowing £6,500 over 48 months with a representative APR of 21.4%, an annual interest rate of 21.4% (Fixed) and a deposit of £0.00, the amount payable would be £196.24 per month, with a total cost of credit of £2,919.52 and a total amount payable of £9,419.52


Car Finance with a guarantor

When looking to finance a new or used car, there may be situations that mean lenders need an additional level of assurance that you won’t miss a payment. This additional assurance that may be offered to you is car finance with a guarantor. This simply means someone can pick up any payments that you miss during the term of your agreement if you have a problem and cannot make the repayments. 

These loans are generally unsecured personal loans and while it’s still the responsibility of the person who takes out the loan to pay it back, the extra cushion of a guarantor can help make sure that payments aren’t missed, which can make them more appealing to lenders.

ChooseMycar are experts on guarantor loans for bad credit car finance, and guarantor loans are usually available on all types of car finance. 

How does car finance with a guarantor work? 

Guarantor Car finance works like other credit agreements, you must pay off the amount you have been leant over a period of time. The only difference is with guarantor car finance, a third party will be added to the agreement.

A guarantor for car finance will be someone who pays off the agreed amount if the borrower fails to make a repayment. This will be the case for each missed payment over the term of the car finance agreement. The guarantor must be arranged before the car finance agreement is applied for. Once that particular car finance agreement has come to an end the guarantor is no longer part of the deal.

Who needs a guarantor for car finance?

Generally people who need a guarantor to help them get a loan are people with bad credit or no credit history. For car finance this generally means they fall into the following categories, although this is not an exhaustive list and each application is treated differently:

  • People with bad credit
  • Young drivers who have not had a chance to build up a credit history
  • Self employed people who can’t prove their income, or those who have just started a new job

In each of these cases, a guarantor may be required by a lender before they approve a loan. This doesn’t mean that the lender should be relied upon for actually paying it off though, as they should mainly be used as a safety net.

Who can be a guarantor?

Almost anyone can be your guarantor, they just have to be financially independent from the person taking out the loan (i.e. not a spouse). This could be a family member, friend, or even a work colleague. 

To meet the requirements of a guarantor, a person must:

  • Be over the age of 18 (some lenders may require the guarantor to be over 21)
  • Is financially independent to the person taking out the loan
  • A partner, spouse, parent, friend, aunt, uncle or any other person you know can act as a guarantor as long as there is no financial link between them and the applicant
  • Have a good or excellent credit history
  • Have a history of good debt management
  • Can afford to meet the repayments should the person taking out the loan be unable to pay

A person has a better chance of being accepted as your guarantor if they are a homeowner. There is no risk on the guarantor's home if you default on payments, but it helps strengthen the guarantor's case as a responsible lender. 

How does it work? 

As soon as someone has agreed to become your guarantor, you’ll need to register them with ChooseMyCar (the lender), at which point we will start the application process by conducting affordability checks. 

Once the affordability checks are complete, the loan agreement will be agreed and finalised. The person taking out the loan, and the guarantor will have to both sign the loan agreement. 

The money is then transferred to the guarantor, instead of directly to the lender. The guarantor then passes on the money to the loanee. 

You will then start the repayment terms that were set up between ChooseMyCar (the lender) and you the borrower. These will often be monthly for a set agreed term. If the worst happens and the borrower cannot make the repayments, then the repayments will fall into the responsibility of the guarantor. 

Why choose a guarantor car finance deal?

Using a guarantor can be of particular importance for those with a bad credit history or no credit history. It can allow them to enter a car finance deal when they previously may not have been able to do so, and it can also help them rebuild their credit rating. While the rates may be higher than hire purchase car finance, customers will have a better chance of being accepted onto a guarantor deal.

If someone with a bad credit history has a guarantor loan and consistently makes their loan repayments on time it can assist with improving a bad credit score. This means that the next time you’re applying for car finance you may be in a position to apply for a more traditional method of car finance. 

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Frequently Asked Questions

Yes, you can get car finance using a guarantor. Having a guarantor may make a lender more likely to accept someone with bad credit or no credit history as a borrower. This means they can be a good option for people in these situations. 

While a guarantor can help someone who has bad credit get approved for car finance, they themselves cannot have a poor credit score.

Guarantors will have to undergo a credit check at the same time as the borrower. This is done to make sure that they are in the right situation to be making any repayments if they are called upon, and the lender will want to see that they are reliable.

A guarantor loan is different from other loans in a couple of ways. First of all, they include a third party. That third party will be someone you know who will act as a guarantor and will make any of the payments you miss. Secondly, guarantor loans are generally unsecured, meaning they aren’t placed against an item, like the car in a car finance agreement, so the car is unlikely to be reclaimed if a payment is missed as the guarantor will step in and make it.

While it’s not uncommon, and often preferred by lenders, for a guarantor to be a homeowner, it’s not essential. They could be a renter or even live with their parents. The important thing is that they can prove that they can afford to make any missed repayments.

Having a guarantor can help you to get a loan when you otherwise may not have been able to, i.e. when you are a young driver, self employed or have bad credit.

Lenders may look more kindly on someone in one of these situations if they have a guarantor so they know that there’s less chance of a missed payment.

Read our guarantor loan guide.

A guarantor is someone that will meet payments if you miss one. They are usually a parent, but can be anyone not directly linked to you financially, i.e. you can’t have a joint account with this person.

Read our guarantor loan guide.

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