You can stop being a guarantor altogether if:
You get the borrower or guarantor to pay off the loan in full
The lender goes out of business
If the loan is paid off in full, the guarantor no longer has to be involved and essentially the loan agreement is closed.
This could be a viable option and repaying the loan earlier is usually significantly cheaper since you are accruing less interest overall. For example, if you borrow a guarantor loan of £3,000 at 49.7% representative APR, your total repayment after 36 months will be £4,830.48 but after 48 months will be £5,533.92.
Of course, if the lender goes out of business, you will no longer be liable for repayment, although the debt may be passed onto another company or liquidators. This should not be a reason to avoid full repayment.
Sadly, not. Again, the success of the loan and the amount you have borrowed may have been approved on the guarantor’s eligibility (income, credit score, homeowner status), so using another guarantor may not be eligible for the same loan terms or have been approved in the first place.
In the event that the guarantor dies, the spouse or next of kin may be called upon to be the guarantor. Or the lender may be able to stake a claim in their estate in order to recover potential losses.
Yes, there are a few guarantor lenders we work with at My Financial Broker that may allow you to add more than one guarantor onto your loan agreement. However, this will be required at the beginning of the application and not during the loan term.
If this is of interest to you, you should raise this with your guarantor during the application process.
As a guarantor, you will have a two-week cooling period when the loan has been approved and funded. The money is sent to the guarantor’s bank account first as a security measure, since the lender wants to send the funds to someone who has a good credit score.
The guarantor has two-weeks where they can decide to pass the funds onto the borrower and continue the arrangement, or they can change their mind and send the money back to the lender with no fees charged.
Every guarantor lender in the UK will have different terms and policies when it comes to changing or stopping your guarantor loan. It is recommended that you get in touch directly with the lender to assess the options available to you. Where possible, the lender will try to accommodate you as best as they can.