What Is a Guarantor Loan and How Do I Get One?

By Jamie Cattanach · March 09, 2022 · 8 minute read

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What Is a Guarantor Loan and How Do I Get One?

Maybe you’ve already tried to apply for a regular, unsecured personal loan — only to be turned down.

If so, a guarantor loan might be an option worth looking into. Secured by the promise, or guarantee, of a close friend or family member, guarantor loans make it more possible for those with little or poor credit history to qualify for unsecured personal loans. They do, of course, have their own downsides to consider, so read on to learn everything you need to know about this type of personal loan.

What Is a Loan With a Guarantor

A guarantor loan is a lot like a regular personal loan. The borrower gets a lump sum of money they can use for a variety of purposes, and they must repay the loan at regular monthly intervals over a term of months or years.

However, a guarantor loan comes with the security of a guarantor, a friend or family member who pledges to pay back the loan if the primary borrower goes into default. This makes guarantor loans more accessible for those with a limited or poor credit history.

How Do Guarantor Loans Work?

Like applying for other personal loans, when you apply for a guarantor loan your financial information will be assessed — but so will the guarantors. This adds strength to your loan application and can make it possible for borrowers that might not otherwise qualify to receive the loans they are seeking for major expenses and purchases.

Like other installment loans, once the application is approved, the money will be issued to the borrower as a check or direct deposit, and regular monthly repayments, including interest (which may be higher than that on other types of personal loans), will begin. If the primary borrower fails to repay the loan, the lender will then look to the guarantor, who would be legally obligated to make payments.

Are You Guaranteed to Get a Loan With a Guarantor?

Although it can certainly help your case, there’s no guarantee that you’ll be qualified to take out a loan with a guarantor. Approval depends on the financial profiles of you and your guarantor and the eligibility requirements of the bank.

Who Can Be a Guarantor for Loans?

A guarantor doesn’t need to be anyone specific, although usually a close friend or relative is chosen.

Additionally, a guarantor should have a solid credit history and steady income in order to help the primary borrower qualify for the loan. Each lender will have its own eligibility requirements, so be sure to check the fine print and ensure the person you have in mind is eligible before you apply.

What Should I Look For in a Guarantor Loan?

Like any other loan, it’s generally a good idea to look for a guarantor loan with the lowest interest rates and fees, as well as one that offers loan amounts large enough to cover your financial needs.

As mentioned above, guarantor loans tend to have higher interest rates than other loans, so it’s worth shopping around to ensure you get the lowest possible APR — doing so could save you a lot of money over time.

How Much Can I Borrow for a Guarantor Loan?

Guarantor loans vary in loan amount depending on which lender you choose as well as the financial details of both you and your guarantor. There are many different ways to use personal loans, so once you know how much money you need, you’ll have to shop around to find a loan that will fit your financial needs.

Guarantor Loan Requirements

Guarantor loans have eligibility requirements such as minimum credit scores and income thresholds that the guarantor will have to meet in order to qualify.

Credit Score

While the borrower’s credit score might be poor or fair, the guarantor’s credit score should be considerably higher in order to secure the loan.

Recommended: How to Build Credit Over Time


Both the borrower and guarantor will need to reside in the country in which the financial institution is based.


It’s a good idea to ask a trusted friend or family member to be a guarantor. This is a person who will be familiar with your financial details, so trust and communication is important. Someone who agrees to be your guarantor is taking on some financial risk to help you, so they will want to be confident that you’ll uphold your part of the agreement.


The guarantor will need to verify a consistent income that’s sufficient to make payments on the loan if the primary borrower cannot. The particular level of income will likely vary depending on the amount of the loan being applied for.


Both guarantor and borrower will likely need to be at or above the age of majority in their home country, generally 18 or 21.

Types of Guarantors

Guarantors aren’t just for personal loans, and they don’t always take on the full financial responsibility of the agreement they’re entering into. Here are some other ways guarantors can be helpful.

Guarantors as Certifiers

A guarantor may act as a certifier for someone looking to land a job or get a passport. These guarantors pledge that they know the applicant and they’re who they say they are.

Limited vs Unlimited

Acting as a guarantor doesn’t always mean you’re responsible for the entire loan if the primary borrower fails to repay it. Limited guarantors are liable for only part of the loan or part of the loan’s timeline. Unlimited guarantors, however, are responsible for the full amount and full term of the loan.

Guarantors vs Co-Signers

You may have heard of personal loans with coborrowers or cosigners — is a guarantor the same thing?

Not quite. A cosigner shares the full financial obligation of the loan and ownership of the loaned money or asset from the very start. A guarantor, however, is obligated to repay the loan only if the primary borrower defaults and has no ownership in the loan proceeds or what they purchased.

Both co-borrowers and guarantors can strengthen a loan application that may otherwise have been denied.

Recommended: Guarantor vs Cosigner

Pros and Cons of Guarantor Loans

There are lots of things to consider when comparing loans in general. But when you can’t qualify based on your own creditworthiness and are depending on someone else to help you qualify, you may want to look at all of the benefits and drawbacks before deciding if this is the right choice for you.

Pros of Guarantor Loans

Cons of Guarantor Loans

Can help borrowers who otherwise wouldn’t be able to qualify get a loan. Typically considerably more expensive than other types of personal loans, since the lender has more risk.
Are increasingly available from a wider variety of lenders. The guarantor will be responsible to repay the loan if the borrower defaults, even if their financial circumstances change — and if they fail to do so, their credit history will be affected.
May not have interest rates as high as payday loans and other predatory financial products and services. Asking someone to be a guarantor on a loan for you can be difficult, and if you do default on the loan, it can be stressful to know it will affect their finances.

What Happens if a Guarantor Cannot Pay?

Since a guarantor is legally obligated to repay the loan if the primary borrower defaults if they fail to do so, the loan will go into collections. This process will have ramifications on the credit of the borrower and guarantor alike.

Alternative Options to a Guarantor Loan

What if you don’t have a trusted person to ask to be your guarantor or you don’t want to ask anyone to take on this responsibility? Here are some alternatives to a guarantor loan that you could consider.

•   Secured credit card. If you have some cash, you could pledge that as collateral on a secured credit card. Responsible use of this type of credit card could help you build your credit history so you can improve your chances of future loan approval. Interest rates on secured credit cards can be higher than regular credit cards, and there may be fees associated with their use.

•   Flex loan. A line of credit that is similar to a credit card, a flex loan can also be used to build credit. Borrowers can use funds up to their credit limit, repay those funds, and borrow them again. Interest rates on flex loans tend to be high, and there may be fees assessed daily or monthly — or even each time the loan is used.

•   Loan from a friend or family member. Perhaps the person you ask to be a guarantor doesn’t want to take on that responsibility, but they are willing to directly loan you the money. A loan from family or a friend can be an option to consider, but it can be difficult on relationships. Having a written agreement outlining the expectations and responsibilities of both parties will go a long way to minimizing miscommunication and hurt feelings. Keep in mind that this is not an option that will help you build your credit history.

The Takeaway

Getting approved for an unsecured loan is more likely if you have a solid credit history, an above-average credit score, and sufficient income to satisfy a lender’s qualification requirements. If you’re lacking one or more of these things, you might be considering other types of loans, which may include a guarantor loan.

SoFi Personal Loans have competitive, fixed interest rates and no fees required. They can be used to consolidate debt, pay medical expenses, or for a variety of other financial needs. Checking your rate takes just one minute and won’t affect your credit score.*

Learn more about personal loans from SoFi


What are guarantor loans?

A guarantor loan is a type of personal loan for which two people are responsible for repayment: the primary borrower and, if that person defaults on the loan, the guarantor.

How do I get a guarantor for a loan?

You might consider asking a trusted friend or family member to be a guarantor. This person should be someone who has solid credit and sufficient income to cover the loan payments if you default on the loan.

Are you guaranteed to get a loan with a guarantor?

No. Having a guarantor may strengthen a loan application, but it’s up to each individual lender to assess the qualifications of both parties.

Photo credit: iStock/fizkes

*Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

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