Do I Need a Guarantor for a Car Loan?
Do I need a car loan guarantor?
There are many reasons why you might consider a car loan guarantor. Most people who consider a co-borrower or guarantor will be doing so to help share the financial cost of the loan and to increase the amount of money that they can borrow.
Choosing a car loan guarantor is a big decision and one that needs careful consideration. You’ll also want to clearly understand the difference between co-borrowers and guarantors. If you’re feeling overwhelmed, our team of experts is always happy to talk through the right options with you when you choose your car loan.
What is a car loan guarantor?
A guarantor is someone who agrees to take overpaying for your car loan if you're not able to.
If you get a car loan with a guarantor, they will only have to make loan repayments if you are not able to do it yourself.
Can having a guarantor for a car loan help you in the long run?
Absolutely. If everything goes to plan, you’ll reap the benefits of having a car loan guarantor because you’ll be seen as less risky to lenders and may get a lower interest rate.
If the loan is paid back in full, you may even enjoy a boost to your credit score. This will mean you may find it easier to borrow money in the future.
There are questions you need to ask both yourself and the potential guarantor before you take out a car loan. These may include:
- What’s my current financial situation and can I afford to make repayments?
- Is my current income secure for the full loan term?
- Am I likely to default on the loan?
- Will my relationship with the car loan guarantor be affected?
What will lenders look at when you apply for a car loan with a guarantor?
The main thing that lenders will be concerned about is that the loan is repaid in full at the end of the agreed loan term.
They may ask for details (from both you and the guarantor) such as:
- Credit rating
- Previous financial history
- Current loan applications
- Proof of income
- Proof of stable address
It really helps to have all of the information available in advance to avoid unnecessary delays. If you’re unsure about what a lender will require from you, speak to us today and we can help you to get organised and save time.
Is a car loan with a guarantor the right option for you?
It’s always good to talk about your situation with experts who have experience dealing with car loans – this will help you get a clearer idea of whether a car loan with a guarantor is the right option for you.
Generally, as long as you and your guarantor trust each other and they are confident with your financial stability, this can be an excellent option for getting a car loan that you may otherwise not have been able to get.
Have a look at this example of how to choose between a co-borrower or a guarantor on a loan – and see if you think it’s right for you.
How to get a car loan with a guarantor
Finding your guarantor is the hardest part. Once you have who is happy to guarantee your car loan, you are ready to get started.
We have decades of experience and access to a wide range of lenders, so we can always direct you to the best option for you.
Get all your documents in order and make sure you’ve ironed everything out with your guarantor before you begin the process. We can help you find the right loan to suit you and your guarantor.