As a guarantor, you are required to pay back the loan if the borrower doesn’t.
This means you might have to pay any missed payments and future payments until the loan is fully paid. This could affect your credit score, and if the loan isn’t paid, you might have to pay late payment fees and face legal action.
This is where the guarantor helps. A guarantor is someone who knows the borrower and believes they can make the loan payments. People only agree to be a guarantor if they trust the borrower to pay back the loan. That’s why most guarantors for our borrowers are close family members or friends.
To be a guarantor, you need to:
Being a guarantor has risks. If the borrower doesn’t pay, you will have to cover the payments and future repayments until the loan is fully repaid. This could lead late payment fees, it could affect your credit score and may lead to legal action. If you’re not sure the borrower will pay, or if you don’t know them well, it’s best not to be their guarantor. You can use our decision tree to see if being a guarantor is right for you.
If you are a guarantor, you can help a friend or family member get a loan to:
Before you decide, its important to know that you are required to pay back the loan if the borrower doesn’t. This means you might have to pay any missed payments and future payments until the loan is fully paid. This could affect your credit score, and if the loan isn’t paid, you might have to pay late payment fees and face legal action.
When the borrower has read and signed their contract, they will get an email and text with a link to your contract as the guarantor. You will receive this link by text or email.
When we finish our checks and have made sure you and the borrower understand your roles and can afford the payments, we will send the loan money straight to your bank account.
This keeps you safe from fraud and gives you time to feel comfortable as a guarantor before passing the money to the borrower.
If the borrower misses a monthly payment, we will let you and the borrower know right away by text and email. This way, you are kept informed as soon as we are. We will then try to contact the borrower to understand the issue and see how we can help. Our aim is always to try to find a solution to help the borrower before we contact the Guarantor If we can’t reach them, we will attempt to take the payment from their debit card.
If this doesn’t work, we will keep trying to contact the borrower. After five working days, if we still can’t reach them, we will use the Continuous Payment Authority (CPA) to collect the missed payment from your debit card. A CPA is an agreement that allows us to take payments automatically from your card when payments are due. If payments cannot be collected from either card, a late fee may be added, and a letter will be sent to the borrower. You will also receive a copy as the guarantor.
Once you are aware of the missed payment, we recommend that you contact the borrower to see what has happened and get in touch with our team as soon as you can. If you know the borrower is having trouble, you can log in and make the payment yourself online to avoid late fees or the loan going into default.
If the loan goes into default, we will notify you and the borrower. You will have 14 days to clear the arrears. On the 15th day after sending the default notice, we will use the CPA to collect the payment from your card or enforce the guarantee.
When we receive the payment, we will confirm this by sending you an email and text message.