Guarantor Car Finance
What’s your monthly budget?
Rates from 9.9% APR. Representative APR 13.9%. We are a credit broker, not a lender.
Representative example: Borrowing £7,500 over 60 months with a representative APR of 13.9%, flat rate of 7.25% and deposit of £0.00, the amount payable is £170.98 per month, with a total cost of £2758.68 and a total amount payable of £10,258.80.
A little extra support to get you on the road
If you’re struggling to get the car finance deal you want because of poor credit, adding a guarantor to your agreement could be the difference in getting that all-important approval.
What is car finance with a guarantor?
Guarantor car finance is a type of loan that requires you to add another person to your finance agreement, known as a guarantor. The purpose of a guarantor is to act as your financial guardian if you can no longer make the payments you’ve agreed to. Essentially, they’re responsible for any debt you’re unable to pay. Using a guarantor offers extra security and lowers the risk to a lender, improving your chances of approval if your application comes with high-risk factors like bad credit or a poor affordability assessment. So, if you’ve struggled to get car finance because of poor credit, affordability or income issues, a guarantor could be the solution to being approved.
How does a guarantor loan work?
If you do get a guarantor loan and end up struggling to make repayments, requesting repayment from the guarantor is very much a last resort. Your finance company will look for solutions with you directly first and will likely offer a payment plan to get you back on track before going to your guarantor.
The pros of getting car finance with a guarantor
A guarantor loan is about getting you the access you want to a car finance deal that works for you. But considering it involves bringing in an extra party to potentially cover any outstanding debt, it’s something that needs careful consideration before deciding it’s for you.
We’re here to help if you’d like to talk things through. We’ll be able to give you an idea of what car finance options are available based on your circumstances, whether that’s a guarantor deal or another solution.
Better chance of approval
If you’ve got bad or incomplete credit, adding an extra person with a good financial profile can substantially increase your chances of approval.
Access to better deals
You might find you can get approved for deals with lower interest rates, lowering the total cost of your deal.
Higher borrowing limits
A guarantor may mean finance companies are willing to offer you a higher loan amount, meaning you can access better vehicles.
Boost your credit profile
Keeping up with your payments for the duration of the contract can boost your credit rating, which will help with further finance applications and potentially remove the need for a guarantor in the future.
Disadvantages of a guarantor car finance loan
Guarantor responsibility
If you can’t honour your finance agreement, your guarantor will become responsible for the debt, which can cause financial and emotional strain – so you need to pick a reliable guarantor you know you can trust.
Higher cost/rates
Guarantor loans can often come with higher interest rates attached, particularly if the main applicant has very poor credit.
Removal of a guarantor isn’t easy
If your financial situation improves to a point where you no longer need a guarantor, you may find it tough with some lenders to remove them from your contract.
Why go for a guarantor loan with Hippo Finance?
- Bad credit specialists
As bad credit specialists, we take pride in helping those others won’t. We work with a handpicked panel of lenders who offer a range of finance opportunities, including those focused on applicants with poor credit. So, if you aren’t sure about where you stand, we’re in a great place to help.
- Get an approval decision in minutes
It’s easy to check your chances of approval for finance with our free soft credit check. It takes two minutes to apply, won’t impact your credit score* and you’ll typically get a decision in as little as 30 minutes.**
- Dedicated account managers
Our dedicated account managers provide an end-to-end service that covers all the complicated elements of guarantor financing for you. We’re rated ‘Excellent’ on Trustpilot for a reason. Not sure where to start? Give us a call.
Guarantor car finance FAQs
Who might need a car finance guarantor?
Guarantor loans are designed to help people with poor or incomplete credit that’s causing them to struggle with approval for car finance. A guarantor finance deal might make sense for you if:
- You have bad or incomplete credit.
- You have a low or fluctuating income.
- You’ve struggled with affordability assessments.
- You’re a young or first-time applicant with a limited credit history.
Who can be a guarantor for a car finance loan?
Typically, a guarantor must have a good (or ‘low-risk’) financial profile. This might include:
- A good credit score.
- A good credit history of making repayments on time and in full.
- A stable income that meets affordability criteria.
- Having UK residency.
- Being over 21 years old (age limits may vary by lender).
- Owning a home (this is often preferred but not essential).
- No financial links to the applicant (for example, partners or spouses are often not allowed as guarantors).
From an applicant’s perspective, a guarantor should also be someone they can trust – most likely a close friend or family member. You need to be sure that a guarantor will act as your financial safety net if called upon, and be aware that such finance agreements can strain relationships if the guarantor is required to step in.
What happens if I don’t keep up with my payments on a guarantor car finance agreement?
Despite the whole purpose of a guarantor loan being to have a financial guardian who can pay your debts if you can’t, using them is considered a last resort by most finance companies. Lenders will almost always look for a solution with you directly before requesting guarantor payment. This might be a payment plan that makes your monthly repayments manageable or adjusts the length of the contract.
If you find yourself in financial trouble during your deal, the first thing you need to do is get in touch with us, and we can help you with the next steps in finding a solution that gets you back on track.
What are the risks of being a car finance guarantor?
Taking on the role of guarantor comes with significant financial responsibility, which is why you need to be sure you’re capable of making any payments you might be required to before agreeing to be named on the contract.
Beyond the financial obligations you might face, you might find your credit score is impacted in the first place by linking yourself to a bad credit applicant, or if you can’t make the payments yourself. You’ll also remain the guarantor on the deal even if you no longer associate with the applicant.
Guarantor relationships can turn bad if you’re not fully clued in on and committed to the contract and both parties’ obligations, so make sure you’re fully aware of your responsibilities and expectations before entering the deal.
Will being a guarantor affect my credit score?
Being linked to someone with poor credit can negatively impact your credit score – even if you have great credit and haven’t done anything wrong – as the application will involve a hard credit search. Likewise, if you end up responsible for any outstanding debt on the deal but can’t afford to pay, your credit score will likely take a negative hit.
If you’ve been asked to be a guarantor on a loan, make sure you’re fully aware of your responsibilities and the potential implications before agreeing to be named on the contract.