Unfortunately, once you have co-signed a loan agreement as a guarantor and the funds have been sent, you cannot simply stop being their guarantor.
This is because the original loan terms are heavily influenced by your ability to back up that person’s loan application and guarantee repayments on their behalf. This includes the loan duration, loan amount and the rate charged. So unfortunately, one cannot stop being a guarantor with a simple phone call or filling out a form.
Guarantor loans are typically suited for those that might have been turned down by mainstream banks and lenders due to adverse credit. They can apply with the help of a guarantor with good credit who agrees to meet repayments if they cannot. There are around 12 lenders that offer guarantor loans in the UK allowing customers to borrow up to £15,000 repaid over 60 months.
Guarantors are also used by potential property owners who are looking to extend their borrowing facility, and need a guarantor to provide additional security (guarantor mortgages).
For first-time property buyers, those that have their parents as guarantors may be able to access loan-to-values of up to 100% which is significantly higher than the national average of 60%.
The typical guarantor is usually a parent or sibling who wants to help their relative get the finance they need. Other common guarantors include spouses, friends and close work colleagues.
For business loans, one can ask someone to…