A guarantor loan is a personal loan, where a second individual is responsible for making the monthly payments if the customer fails to do so. In most cases this is a family member or a friend.
These loans are ideally suited to people who are unable to gain traditional sources of credit, due to their credit profile or lack thereof. A Guarantor Loan company will require that the guarantor is a suitable person. A suitable person is someone who has a good credit history and who is preferably a homeowner. Should the customer falter on the loan, the guarantor is liable for the outstanding amount. The guarantor must be financially independent of the customer.
As with a personal loan when the customer and the guarantor sign the guarantor loan agreement, they agree to make regular payments to the lender until the amount borrowed, plus interest, is repaid in full. There are no vehicle usage or mileage restrictions because the customer has title to the vehicle.
The agreement can be ended at any time by settling all outstanding balances on the agreement and paying any necessary fees. In most cases, any surplus interest will be rebated to the customer by the finance company. If the Consumer Credit Act regulates the agreement, the minimum amount to be repaid is stipulated by the Finance and Leasing Association.Back to Products