Guarantor car finance is a loan where a third party individual agrees to guarantee the repayment of your car finance loan when you default/fail to make the necessary payments. In this way, a guarantor will support your application for car finance by agreeing to be responsible to pay off an outstanding loan. In other words, your nominated guarantor is contractually bound to step in and make the remaining payments on your behalf.
Once your nominated guarantor has formally agreed to accept that role, your application for car finance is processed by us in the normal speedy fashion.
We charge no fees and no upfront deposit is required for guarantor car finance but the loan is paid directly into your bank account, so that you have the necessary cash to buy the car of your choice, from any source, new or second hand.
You don’t even have to use your guarantor loan to buy a car. It may be used for debt consolidation, where you use the advance to pay off an existing loan or line of credit, and therefore merge your debts into one single, manageable loan.
A guarantor loan is similar to a personal loan as you are able to decide how you use the funds. For example, you have the freedom to purchase a car, pay for your car insurance or your road tax.
Almost anyone can act as your guarantor but they must not be financially linked to you such as a spouse. They could be another family member, a friend or even a work colleague. They must provide bank details, bank statements and ID.
For someone to be accepted as your guarantor they will need to be between 18 and 75 years of age and be able to afford the repayment schedule if you fail to do so. They must also have a good credit history and have had no problems in managing their debts in the past. It is also advantageous if they are a homeowner although this is not a strict requirement. This is not to say that the guarantor’s home is at risk if you default on your repayments. Rather, that they are bound to make the repayments on your behalf if it becomes necessary for them to do so.
In some circumstances, lenders will accept tenants who have been at the same address for many years and who have an excellent credit history.
This policy is ideal for those who have a less than perfect credit history and/or have difficulty in getting approved for finance. This may be because you do not have a regular income, you’re newly or self-employed or you have zero hours working contract. It’s also helpful if you have county court judgements against you or you’ve been declared bankrupt. In general, these loans will allow you to borrow a higher amount than you would be able to normally with poor credit. However, it is very important to understand that payments would be realistic for your circumstances. The guarantor is there as security for the lender and will hopefully not be required. Use our car finance calculator to work out what monthly repayments will suit your current financial situation.
If you fail to make your repayments then your guarantor is liable for your debt. The lender will ask them to make the payment(s) on your behalf. You could, therefore, both get issued with a county court judgement (CCJ) against your names. This will affect your ability to obtain credit in the future.
If you are looking to buy a new or used car, you may need funds as quickly as possible in order to purchase the car you want at the desired price.
Speed is precisely what we aim to achieve at Car Finance Plus. Through our streamlined, online application process, both you and your guarantor simply need to complete the relevant forms and we strive to get the agreed car loan to you within the next 24 hours.