Questions To Ask Yourself Before You Become a Guarantor

We published a blog for Guarantors last year about what it means to be a Guarantor and the questions you should ask yourself before agreeing to be one. We wanted to update this with additional questions that Guarantors have asked us over the past year.

Being a Guarantor on a TFS Guarantor Loan means you are helping someone with a poor credit score or no credit history, to access borrowing that they may not be able to obtain elsewhere.  It is important that you understand what a Guarantor loan is and what your role would be. We have created a Guarantor Hub, exclusively for Guarantors, to explain what is involved.

There are a number of questions you should ask yourself before you agree to be someone’s Guarantor. We have outlined these below:

Q1: Why do they need a Guarantor and a Guarantor Loan?

If you aren’t sure that they do and they haven’t explored other forms of lending, you should advise them to look at all their lending options before they decide they need a Guarantor Loan. If they have a poor credit score or no credit history and have explored other options, but have settled on a Guarantor Loan, then ask yourself the next question….

Q2: What will they use a TFS Guarantor Loan for?

If they need the money for something immediate, go to the next question. If they can afford to wait they could look at savings options.

Q3: Can you trust them to pay the loan back, on time, every month?

If the answer is Yes, they are a trusted friend/family member and very reliable, go to the next question. If the answer to this is No, you should not agree to be someone’s Guarantor. If they don’t pay the loan you will be responsible for paying it on their behalf.

Q4: Do you have a lump sum you can lend them?

If the answer to this is yes, you should consider lending them the money from your savings, providing you are happy to collect monthly payments from them. If you do not have a lump sum available or are not happy to collect monthly payment, go to the next question…..

Q5: Could you pay back their loan in the event of them not paying?

If you have available funds and would be willing to pay the debt if needed, go to the next question. If you cannot cover the loan amount do not agree to be a Guarantor as you will be responsible for the debt if they do not pay.

Q6: Do you want to help them to build up their credit score to make borrowing easier for them in the future?

Yes – a Guarantor Loan would be a good option. Even if you aren’t concerned about their future lending ability it is still worth considering a Guarantor Loan.

After reading the above, if you are still keen on being someone’s Guarantor, you may be interested in the most commonly asked questions from other Guarantors:

Q1: What are my responsibilities as a Guarantor?

As the Guarantor on a TFS Loan you are responsible for paying any missed monthly instalments of the loan that are not paid by the Borrower. If the Borrower stops paying the loan, you would need to cover the amount outstanding. This is why we ensure, during the application process, that you are able to do this and are fully aware of this commitment before you agree to be a Guarantor.

We will, of course, work with the borrower first, to try to ensure they don’t miss payments. We only come to you as a last resort and we will only ever ask you to pay in line with the agreement.

2: Will being a Guarantor affect me obtaining other loans or mortgages in the future?

No. Loans with a guarantor will not affect the guarantor, in regard to taking out other loans and mortgages in the future, providing that the terms of the agreement are upheld and maintained. The only payments you will have to make, is if the borrower cannot make the monthly payments. The loan is registered in the name of the borrower and will not affect your credit score, in the long term provided all payments are made on time and in full.

Q3: What happens if the borrower does not pay?

Unfortunately, if the borrower fails to make a payment, for any reason, after discussing the missed payment with them, we would contact you. As the guarantor, we would ask you to cover the monthly payment for them. Providing loans with a guarantor, ensures that the monthly payments will be covered if the borrower cannot make a repayment.

For ways to make a payment, visit our ‘How to make a payment’ page.

It is important, when you become a Guarantor on a TFS Guarantor Loan, that you have the means to cover the monthly repayments should the borrower get into difficulties.

Q4: Can I stop being a Guarantor?

You can stop being a Guarantor if either you or the Borrower repays the loan in full. However, you are committed to being a guarantor throughout the duration of the loan term – which means if the borrower cannot make monthly repayments, you must cover them. You cannot stop being a Guarantor part way through a loan.

Q5: Can I help pay the loan each month?

TFS Loans does not ask the guarantor to make any payments, except when the borrower cannot afford them for any reason. The borrower who has taken out the guarantor loan is the primary loan payer, but you are free to assist them if you wish.

If you wished to help the borrower to repay the loan each month, you can do this is a number of ways. Please call us on 0203 476 7399 to discuss your options.

Q6: What do I have to be in order to be a Guarantor on a TFS Loan?  

You will need to be aged between 18 and 75 at the time that the borrower takes out the loan and when the loan completes. You will need to be based in the UK and own a home in the UK. You also need to have a good credit score.

The most important thing is that you are able to make the loan repayments if the borrower cannot and that you understand this obligation.

If you have any other questions before you decide to be a Guarantor for a TFS Guarantor Loan visit  Frequently Asked Questions for Guarantors on our website.

Please feel free to call us if you wish to discuss anything – 0203 476 6438.

We offer Guarantor Loans from £1,000 to £15,000, over 1 to 5 years.