Guarantor Loan

A loan where a third party (the guarantor) agrees to make repayments if the borrower cannot. Guarantor loans are designed for borrowers with poor or limited credit history who may not qualify for standard unsecured loans. If the borrower misses payments, the lender will pursue the guarantor, which can damage the guarantor's own credit file and financial relationship with the borrower.

A 19-year-old with no credit history asks their parent to act as guarantor on a £1,500 loan, making approval possible where it would otherwise be declined.

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