Are there guaranteed loans?

Stick man with a tick

You can get a loan that is guaranteed by a guarantor 😀

If you have a poor credit history and are looking for a loan, the options can be expensive.

If you have the loan guaranteed by someone with a good credit rating, then more affordable credit is available.

You cannot get a loan that has guaranteed approval 😔

All loan approvals in the UK must be based on the status of the applicant (also if applicable, their guarantor).

The FCA who regulates the UK industry prohibits companies offering any form of credit where it is suggested that applications are in any way guaranteed.

You cannot get a guaranteed approval loan.


Frequently asked questions

1

What are guaranteed bad credit loans?

A type loan that requires you to have someone to guarantee your loan 🧑‍🤝‍🧑

  • Not a loan where you are guaranteed approval - UK lenders are not allowed to make any form of guarantees.
  • This type of loan is normally called a ‘guarantor loan’.
2

What does it mean to guarantee a loan?

When you guarantee a loan, you are agreeing to make the repayments if the borrower defaults ⚠️

  • To be legally liable for someone else’s loan.
  • Often called the ‘loan guarantor’.
  • Someone with a good credit rating.
  • Someone willing to support the loan application and take on the potential liability.
  • Usually a family member, or friend of the borrower.

When guaranteeing a loan, you can become fully liable for the debt (and could get a damaged credit file as a result), so you should make sure you are fully aware of the implications see our Being a Loan Guarantor page.

3

How does a guarantor loan work?

A type of loan that makes credit available to those with a poor credit history 👍

  • Clean credit- require someone with a clean credit history to guarantee the loan application.
  • Better rates- they typically have better rates than other types of poor credit loans because the lender has the security of the loan guarantor.
  • APRsoffered by lenders range are typically between representative APRs of 39.9% and 54.9%. The rate that may be available will depend on loans size, length (months) and the status of the borrower and guarantor.
  • Loan amountsvary from £500 to £15,000
  • Repayment periods also range from 6 to 60 months.
  • For more information see here.
4

How to find someone to guarantee a loan?

Typically, these will be family members, friends, or close work colleagues of the borrower 👪

  • A suitable person should have a clean credit history, be a United Kingdom citizen and be employed.
  • The best way to find someone is to ask them.
  • For information see our guide on How to find a guarantor for a loan?
5

Are you guaranteed approval with a guarantor?

No 👎

Lenders will look at your, and your guarantor’s circumstances, and currently will not consider:

Borrowers

  • Under 18 or over 75
  • Zero income
  • Non-UK resident
  • No bank account or debit card
  • Insolvent (undischarged bankrupt, IVA, trust deed)
  • Where the loan is not affordable

Guarantor - in addition to the above, lenders will not consider guarantors with poor credit history.

For more information see page What is the guarantor loan eligibility criteria?

6

Who regulates guaranteed loans?

The Financial Conduct Authority (FCA) 🛃

  • Within the UK, loans, bank accounts, insurance, investments, etc. are all regulated by the FCA.
  • Any lender or loan broker that offers any loan with guaranteed approval is strictly against the FCA’s code of practice.
  • This provides protection to the consumer as there are strict guidelines the industry, lenders, and brokers must operate.
  • Companies not complying can have their FCA licenses revoked and in extreme cases, directors can be liable for prosecution.
  • There is a great incentive for companies not to offer guarantees.
  • If you see a company that does, it should be avoided.
7

What guaranteed loan alternatives are there?

We summarise some options below 👇

PayDay

  • A high-cost very short-term unsecured personal loan designed to last you only until you are next paid.
  • Rates are typically very high up to about 1,500%, and because of this, they are relatively easy to get and have the most relaxed acceptance criteria.
  • Amounts are typically below £1,000.

Instalment

  • High-cost shorter term unsecured personal loan.
  • Rather than being designed for only a few weeks, there is a monthly repayment plan as with most other types of loans.
  • There are lenders that will lend up to £2,000.
  • Acceptance criteria are also relatively relaxed and this is again reflected in their cost, with rates with some lenders up to about 1,500% APR.
  • There are better value instalment loans coming on the market all the time, but they are still a high-cost option.

Doorstep

  • At 272% to 399% APR, doorstep loans are much more affordable than the previous types.
  • You will need to make weekly payments to an agent that visits your house, which some people do not like.

Guarantor

  • The most affordable type of loan for those with a poor credit rating.
  • Representative APRs currently ranging from 39.9% to 54.9%.
  • The most difficult to qualify for as you need to find a guarantor with a clean credit history, but they have the lowest cost.

To get loan quotes for 'guarantor' and 'non-guarantor loans', fill out our simple 3-minute online form.

8

How do I find out my credit rating?

Before you start looking for a loan it is always worth getting a copy of your latest credit file 📋

  • Check My File is a good company to use as their credit report pulls in information from all the three major credit reference agencies - Experian, Equifax, and Call Credit.