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Boost Approval Odds: Guarantor Loans Explained

A guarantor loan can be a great way for those with bad credit histories to access the finance they need.

By having an extra person that you know to act as your guarantor, you can increase your chances of being approved for a loan, despite being turned down by mainstream lenders due to bad credit.

This is because a guarantor can help to give the lender more security that the loan will be repaid – security they would have otherwise got from an applicant’s good credit score.

Proper Finance is passionate about helping borrowers to find the best loan product to suit their needs. By comparing with Proper Finance, borrowers can apply for loans of £500 to £50,000 or higher, repaid over a 3 to 30 years.

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What is a Guarantor Loan?

A guarantor loan works by having an extra person co-sign the loan agreement and guarantee repayments. So in the event that you cannot make your monthly repayments, your guarantor will step in and pay on your behalf.

For the lender, this provides extra security knowing that they are more likely to recover their funds, and if your guarantor has a good credit rating and is a homeowner, this will increase your chances of being approved.

Guarantor loans are commonly used for lifestyle purchases including paying for home improvements, weddings, debt consolidation, education and more.

Proper Finance works with the best loans companies in the UK, allowing you to borrow £500 to £10,000 repaid over 12 to 60 months.

You will just need to use something valuable as collateral which could be a vehicle like your car, bike or van or a property that you own in part-time or full such as a flat or home.


Can I Get a Guarantor Loan With Bad Credit?

Yes, guarantor loans are commonly taken out by those with poor credit or no credit histories. Guarantor loans lenders often accept those with bad credit due to the credit-worthiness of the guarantor.

The main borrower will typically have to elect a guarantor that has a good credit rating, along with other qualities such as owning a home and having a regular, stable income.

Guarantors can be tenants and living with parents or friends, but knowing that the guarantor has their own mortgage and home means that they should be easier to contact and have some kind of means to access finance, even if it is getting a second mortgage against their home or renting out a room!

Once the loan has gone through, you cannot stop being the guarantor for the main borrower until the loan has been paid off, although there is a 14 day cooling period where both parties can change their minds with no fees incurred.

The lenders we work with at Proper Finance will take a view on individuals with a history of bad credit, CCJs and bankruptcy, provided that you have a good asset that can be used as collateral.

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Who Could Act as a Guarantor for My Guarantor Loan?

The most successful guarantors are typically parents, spouses and siblings aged 18 to 75. You ideally want someone who you are close to, in regular contact with, and can speak openly about your finances. Whilst friends and colleagues are also suggested, you ideally want someone who you know you will be in contact with throughout the loan term (up to 5 years).

Key Features Of Guarantor Loans

Loan Amount £100 to £5,000
Loan Duration 1 to 24 months
Rates From 6.5% APR
Bad Credit Accepted Yes
Same Day Decision Yes
Collateral Required Yes
Free to Apply Yes
Online Application Yes


Can a Guarantor Loan Improve My Credit Score?

Yes, a guarantor loan can improve your credit score, provided to keep up with the required monthly repayments.

By making regular monthly repayments on your guarantor loan, your credit record is updated through the three main credit reference agencies in the UK. Therefore, applying for a guarantor loan gives someone with a history of bad credit to get used to making regular payments and prove their creditworthiness.

A series of several, on-time repayments will improve your credit score, helping you access other forms of finance in the future and at more favourable rates. Customers will need to keep up with all kinds of repayments and avoid falling into arrears for other credit products to maintain a healthy credit score.

Guarantor loans can be a great way for those with bad credit histories to access the finance they need.


What Is the Eligibility Criteria for a Guarantor Loan?

In order to be successful in your loan application, you will have to meet certain criteria. This criteria will typically vary from lender-to-lender, however, some of the main requirements applicants will typically need to meet include the following:

  • Be in employment (either full- or part-time).
  • Show evidence that you can keep up with monthly loan repayments.
  • Be a UK-based resident
  • Be over the age of 18.
  • Have a valid debit card

You may be required to use security such as a vehicle or property.

Guarantors will have their own list of criteria to meet for the loan. With a guarantor loan, lenders will typically only approve guarantors who show that they are financially secure and responsible enough to keep up with repayments.

Apply for a Guarantor Loan With Proper Finance

Proper Finance is dedicated to helping its customers find the best financial products for them.

We offer an effective way to compare loans and have partnered with the whole of the UK market to help our customers make the best decision possible.

Applicants can start by completing their details online and we will process their application as quickly as possible.

Simply click on the “apply now” button below to complete our online application form.

Successful applications are typically funded within 24 to 48 hours once they have been approved.

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