Best Guarantor Loans in 2024

Find popular special loans available for those with guarantors…

Updated: May 18, 2024
Matt Crabtree

Written By

Matt Crabtree

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If you need a loan but have a low credit score or trouble getting one, a guarantor loan might help. Learn how to assess who is willing to stand behind you financially and how to apply for a loan through that help.

  • 🎫 Get financing even with a low credit score.
  • 🎫 Get a loan of up to £15k.
  • 🎫 Loans repaid in 1-5 years.

In this article, we look at many of the most prominent UK loan guarantor services.

ProviderScoreDetails
1. 1Plus1 Loans★★★★★Click Here
2. Guarantor My Loan★★★★★Click Here
3. Sainsbury's Bank★★★★★Click Here
4. Pepper Money★★★★Click Here
5. Lloyds Bank★★★★Click Here

At a Glance, Pros and Cons

Let’s look into the pros & cons of the UK’s top guarantor loans?

Pros 

✅ Even if your credit is weak or nonexistent, you could still be eligible. 

✅ Potentially borrow more money than with others routes. 

✅ Making payments on time can help your credit rating. 

Cons 

❌ Rates of interest may be greater than regular loans. 

❌ Your connection with your guarantor could suffer if you fail to repay on time. 

❌ If the guarantor fails to make payments, legal action may be pursued, and the guarantor's assets seized.

Top guarantor loans — Reviews

For both the borrower and the guarantor, what are the implications of guaranteeing a loan? This article will explain all you need to know about guarantor personal loans, including the advantages they provide and problems you should look out for. 

  • Make sure the person you choose to be your guarantor understands that if you default on your loan payments, it will be their responsibility to cover those costs. 
  • Any guarantor should get legal counsel before agreeing to anything.
  • Tell your guarantor how you intend to pay back the loan and why you need it.

The guarantor's connection to you and the lender will be questioned. Financial institutions would rather lend to someone they know and trust, such as a member of the borrower's family or close acquaintance, since they anticipate prompt repayment of the loan.

Let us start by looking at some of the best-known UK loan guarantor companies 👇:

1. 1Plus1 Loans — Overall top-pick guarantor loans provider

People who may have trouble getting a loan on their own could find themselves able to turn to this service provider for guarantor loans. The APR for loans between £1k and £10k starts at 47.8%.

1Plus1 is a small, family-run direct lender (not a broker) that boasts high levels of security and trustworthiness.

Although interest rates may be higher with a guarantor loan, 1Plus1 would nevertheless accept anybody who needs money quickly. The majority of 1Plus1 applicants get their money the day they apply.

You can use an online calculator to get an idea of how much you would have to pay back each month and how much you would have to pay back in total based on the amount you borrow and the length of time over which you want to pay it back.

Estimates are based on the sample APR supplied by 1Plus1 Loans; however, the actual rate you are offered may vary depending on your individual circumstances.

According to Trustpilot, consumers have given 1Plus1 loans an “excellent” rating. Based on over 200 reviews, it has received a 4.4 overall (as of June 2023). The loan application procedure was appreciated by some consumers, while others complained about poor service.

Will I qualify?

1Plus1 will consider you for a loan if you are not presently bankrupt or in an IVA. But there are a number of requirements your guarantor must complete before your loan application can even be reviewed. They have to:

  • Must be at least 18 years old, or 21 if they do not own a residence. At the time the loan is finalised, they must also be younger than 75.
  • You must be a UK resident. A person with excellent credit might be either a homeowner or a renter. Guarantors from the Channel Islands cannot join 1Plus1 at this time.
  • Be a UK resident with a current UK bank account and debit card.
  • You can not have a current bankruptcy or IVA.
  • If you are unable to make the payment, they should be able to.
  • They are not allowed to be your spouse, but you may have a parent who also lives with you 👪.

2. Guarantor My Loan — Specialist loans for lower interest rates

At a close second-place, the borrowers could get a lower interest rate with this top pick.

Norwich-based Guarantor My Loan launched in 2014 with the intention of assisting those who have been turned down for loans by conventional financial institutions because of poor or non-existent credit histories.

If you and your guarantor have decided that a guarantor loan from Guarantor My Loan is the way to go, you will need to submit an online application. According to their main website, the processing time for an application is 60 minutes (during business hours).

Pro tip 💡: A guarantor loan is different from a standard personal loan application in that the lender (or in this case, the platform) will want to speak with you and your guarantor over the phone to confirm the accuracy of the information provided and to ask any necessary clarifying questions. Your guarantor's financial stability and familiarity with the loan's conditions will be two major factors.

Your guarantor will get the funds the same business day they are authorized. In addition, Guarantor My Loan requires access to information for your online bank account. This does sometimes happen, although less often than it formerly did. 

It can see your transactions to determine whether or not you can afford a loan, but can’t make account changes or initiate direct debits or standing orders on your behalf.

Guarantor My Loan requires the following information from applicants

  • Need to be above the age of 18.
  • Be a UK resident.
  • Maintain an active bank account.
  • Have a sufficient amount of disposable income to make the payments.
  • Find someone you know who is prepared to stand as a guarantee for you.

3. Sainsbury's Bank — No repayments for the first two months

Sainsbury’s ranks number 2 on our list of our top reward cards. As for loans, you have the option of deferring your first two payments for two months.

This may provide you some breathing room until you get back on your feet financially, but it will increase your monthly and total interest payments.

Below, we have done the maths assuming you will not take advantage of the payback holiday. We are also counting on the fact that the debt is not paid off early.

Loans from £7,500 to £15,000 are available through Sainsbury's Bank, with a sample APR of 5.8%. Applicants may borrow between £1-£25k from Sainsbury's, with payback durations ranging from 1 to 5 years.

The good news is that you do not have to be a current client of Sainsbury's Bank in order to apply for a loan at Sainsbury's. You will need a Nectar card, however. Ask for one at checkout and use it to qualify for lower credit rates at no cost.

Why choose them?

Sainsbury's Bank has risen in popularity as a provider of fixed-rate personal loans and credit cards because of the perks it offers to Nectar members. In any case, you may save money by looking around for the best offer, since price competition has spread beyond grocery stores to the realm of financial services.

In the past, Sainsbury's has offered to match the price of a loan from a competing lender provided you can provide official documentation showing a lower interest rate from that institution (it is not sufficient to just show an advertisement with a lower APR). However, the website no longer makes reference to this.

The cap is more generous than the industry-standard £25k for unsecured loans. This might make a Sainsbury's loan a tempting option for more substantial expenditures, such as a loft conversion or an expansion, provided that you have good credit and, more significantly, that you can easily manage the repayments.

Sainsbury's, like other modern lenders, lets you do a “soft search” before applying to obtain a sense of your approval odds without negatively impacting your credit.

Will Sainsbury's give me a loan?

Only apply for a personal loan from Sainsbury's Bank if you are certain that you can make your payments on time. In addition:

  • Be within the age bracket of 18-76.
  • You must be a UK citizen or permanent resident.
  • You must have a Nectar card.
  • Have a direct debit-enabled bank or building society account in the UK. This bank account must be in the name of the primary borrower if you are asking for a shared loan.
  • Have a solid credit history devoid of bankruptcy or County Court Judgments.
  • Have a pension or have worked for your present workplace for at least three months. Sainsbury's does not, at this time, provide loans to those who are self-employed.
  • Earn at least £7,500 per year (before taxes). Pensions and income from rentals or investments are OK, but most government handouts, such as child support, housing assistance, tax credits, maintenance payments, and income support, are not.

4. Pepper Money — Homeowner loans

Pepper Money, previously called ‘Optimum Credit’, has lent over £400 million to UK homes since its start in June 2014. It is based in Cardiff, and it provides discounted, discounted, and variable second mortgages.

Pepper Money offers homeowner loans that may be used for everything from home repairs to debt consolidation.

Pepper Money has specialised mortgage consultants who will contact you back when you fill out a callback form on their website.

If you are granted a mortgage loan through Pepper Money, the company will serve in the capacity of a direct lender rather than a broker.

Trustpilot, a consumer review website, reports that Pepper Money has got mostly good feedback from its users. More than 460 reviewers have given it an “Excellent” rating of 4.7 stars. Its customer service and knowledge have been lauded by several users.

With a variety of fixed, variable, and discounted second charge mortgages, plus the ability to release up to 100% of your property's value (less your existing mortgage), Pepper Money aims to provide homeowners with loans that are tailored to their specific needs. 

All in all, Pepper Money is a decent choice if you need a huge loan of up to £1,000,000, but you may be able to find a lender that provides a lower annual percentage rate.

Can I get a guarantor house loan with pepper Money?

You should only apply for a homeowner loan from pepper Money if you match the following conditions and are certain that you can fulfil them:

  • You have mortgage-free homeownership. Depending on the product, there may be a minimum home value required. You must also act as a co-borrower if you are a joint owner of real estate.
  • You either have a job or are self-employed.
  • You are using the loan money on legitimate projects. Pepper Money offers loans for a wide variety of situations, including paying off high-interest credit card debt, making necessary home repairs, or buying a new automobile. Equity transfers, divorce settlements, and startup financing are not eligible for funding under the company's lending guidelines.
  • The value of your home's equity is at least £75,000. If you already have a mortgage on the property, Pepper Money may lend you up to 100% of the remaining value. Your property may need to be appraised under specific conditions. You may incur extra expenses to cover this if it becomes required.

5. Lloyds Bank — Fixed-rate guarantor personal loans

Lloyds Bank provides its current clients with access to affordable fixed-rate personal loans. APRs as low as 6.4% are available for loans between £1000 and £50,000.

As for its reputation — Lloyds Bank plc, established in Birmingham in 1765, is one of the “big four” banks in the United Kingdom and serves both consumers and businesses.

Lloyds accepts personal loan applications through their website, in-store, and over the phone.

Lloyds provides a number of different ways to borrow money, so you may finance everything from a new automobile to debt consolidation to a kitchen remodel to a much-needed holiday.

Lloyds provides personal loans without requiring any kind of security, so you may borrow money without worrying about losing your home or car. Borrowers may choose from a 1-7 year repayment plan for loan amounts between £1,000 and £50,000.

Their rates are often competitive, although the rate you are offered will depend on your individual financial situation rather than the benchmark APR.

Can I get a personal loan from Lloyds?

Your credit history, income, and the requested loan amount will all be taken into account when evaluating your application for a personal loan from Lloyds. You should also be certain that you can afford the monthly payments. Then, you will need to check out the following requirements:

  • You need to be above the age of 18.
  • Bring a legitimate photo ID.
  • A UK address is required.

However, if you already have a Lloyds current account, you may not have to go through as many hoops as others to qualify for a personal loan from Lloyds.

Britain’s top guarantor loans — Buying Guide

Let’s explore these services further as a topic. 

Why guarantor loans are being used… 

An explanation of the guarantor loan:

A guarantor loan is different from conventional loans in that you require a third person, usually a family member or close friend, to promise to repay the loan in the event that you default. Borrowing money from a lender and repaying it with interest over time is the same as any other sort of loan.

If your credit history prevents you from being approved for a traditional loan, you may want to look into a guarantor loan. Lenders are more inclined to provide this form of loan to persons with poor credit since the guarantor assumes responsibility for making loan payments in the event of a borrower failure.

Keep in mind that guarantor loans may have interest rates as high as 50% APR. The debt charity StepChange cautions that this might result in you repaying more than double the original loan amount.

How do guarantor loans work?

Many variables (including length of employment at current company, length of credit history, etc.) are considered by lenders when deciding which candidates to approve for loans.

Even if you can afford a loan, you may not be able to acquire one if you do not match one of these criteria. You might ask a close friend or relative for support by signing on as a guarantor in this case.

If you ask a friend or family member to guarantee your loan, they will be expected to pay off your loan in the event that you fail to do so. If the borrower defaults on their loan and you agreed to be their guarantor, you will be held legally accountable for the amount. 

By agreeing to be a guarantor, you are promising to pay back the whole loan amount (plus interest and fees) if the borrower fails to do so. This is quite different from recommending or endorsing the borrower.

You may be required to disclose your guarantor status on any future credit applications you make if you are a guarantor.

If the borrower defaults and the guarantee fails to make a repayment, the guarantor's credit score may suffer. If the guarantor later applies for a mortgage, for instance, the amount of the mortgage they are eligible for may be reduced because of the guarantor loan.

To what people do guarantor loans apply?

You need to meet these requirements to get a guarantor loan:

  • Over 18.
  • United Kingdom citizens.
  • Proving that you have the financial wherewithal to repay the debt.

You may be required by your lender to:

  • 📖 Earn a set amount.
  • 📖 There might be a cap on how old you can be when you complete paying off your debt.

Many loan providers also maintain:

  • 📓 You cannot be in the midst of a bankruptcy proceeding or an Individual Voluntary Arrangement (IVA).
  • 📓 If the applicant's guarantor has a high credit score, the loan provider will still approve the loan.

Leading guarantor loans: The Verdict

You should only take out a guarantor loan if you know for sure that you can afford the monthly payments, but this is true even if you are approved for a personal loan. 

Being a guarantor is a big responsibility that should not be ignored. If the person or entity you guaranteed is unable to make payments, you will be responsible for doing so. Before making any choices, you should do some in-depth research on the matter.

How to evaluate 🔍 

Let’s put this under a magnifying lens… When evaluating guarantor loans, it is important to keep a few things in mind. Compare the terms and interest rates of several loans to get the best one for your situation.

  • 📑 Amount due in whole. How much of the original loan amount, in addition to interest and fees, will be due.
  • 📑 Payback period. Your guarantor loan payment will be the same every month since the interest rate is set. Keep in mind that the rate you see advertised may not be the rate you get from the lender.
  • 📑 Fees. What about costs for applying, setting up an account, purchasing a product, making a payment, making a withdrawal, or prepaying?
  • 📑 Loan amounts and conditions. Choose a term length that results in manageable monthly payments. The interest you pay on a loan increases in proportion to its term length.
  • 📑 Conditions for participation. Are there any gaps in either the borrower's or the guarantor's eligibility requirements?
  • 📑 Paying back early. There may be no penalties for prepayment, but most lenders will assess an extra two months' interest on any principal paid back early.

Related Guides:

FAQs

Can anybody serve as my guarantor?

What are the rates for loans with a guarantor?

Will the guarantor lose their house if the borrower stops making payments?

Drawbacks of having a guarantor

Advantages of guarantor loans

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About Sainsbury’s Bank Sainsbury’s Bank is a British bank owned by the Sainsbury’s supermarket chain. It was the first supermarket bank to open in the UK. It is headquartered in Edinburgh...
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