When Will I Need A Guarantor For Car Finance?

Worried you might have difficulty borrowing money to get your much-needed car? 😟 Most new vehicle purchases in the UK are bought using car finance plans which help ease the financial burden of purchasing a car and paying the cost upfront. But getting the best car finance deal depends heavily on your credit history, and if you don't have a strong credit history, how can you get car financing? 

Who should get a guarantor for car finance?

Buyers with little or poor credit scores, students, or young drivers often encounter challenges regarding loan approvals. You might be able to repay your loan, but how can you get financing? If you fall into this category, then this is where having a guarantor might be useful.

Guarantor car finance is when a third party – either a friend or a family member – agrees to take responsibility for loan repayments being met. Without having a good credit score, going down the guarantor route could be the solution you need to drive away in your dream car. 

How does guarantor car finance work?

A guarantor is a safety net for lenders and reassures them that the loan will be repaid in full. The guarantor you choose should be someone you trust and who trusts you because if you miss any payments,  they are expected to make the monthly payments. Before securing anyone for this role, that person should be aware of the financial responsibility they are taking on.  With a personal loan from the bank, the cash is forwarded to the guarantor to send to the borrower.

Guarantors will, of course, get credit checked by lenders before the loan is approved. This check is done to determine what kind of borrowers they themselves are and whether they can meet their current financial obligations. Before approaching the lender, your guarantor needs to confirm to you that their credit score is in order and that all the information is updated.

Who can be a guarantor for car finance?

Before deciding to use a guarantor, consider the requirements and how you can prepare for your car finance application to get the best chance of approval from the lender. Here are the key points to keep in mind when getting a guarantor for car finance. 

Close Family or Friend

Due to the significant financial responsibility, a guarantor should be someone close to you. There should be a high level of trust and mutual understanding between the two of you. However, individuals financially connected to you or your spouse would not be eligible for this role.

An Adult Above 18 Years

In the UK, it's common for guarantors to be at least 21 years old. That said, some lenders may consider individuals aged 18 and above, depending on their policies. The age range for guarantors typically extends to 75 years as long as they possess the financial stability to support a borrower. This flexibility in age requirements caters to various situations, allowing more people to access guarantor car finance options.

Individuals With A Good Credit History

A guarantor should possess a good credit rating, which serves as evidence of their capability to make timely payments and effectively manage debts. A strong credit score indicates financial stability and responsibility, making them a reliable backup in case the primary borrower defaults on the loan.

Individuals who have a proven track record of making regular loan payments or paying off previous loans without any default incidents are ideal candidates for the guarantor role. Their financial history demonstrates a commitment to fulfilling financial obligations and managing debt efficiently, providing assurance to the lender that they are a reliable choice in case the borrower is unable to meet their repayment commitments.


While certain lenders may insist on having a guarantor who is a homeowner, others might be more flexible and accept renters. Ideally, renters will have a stable residential history – having resided at the same address for a considerable length of time – and maintain an outstanding credit rating.

This demonstrates their financial reliability and stability, despite not owning a property. It's also good to note that guarantors who are homeowners could be at risk of property repossession if the loan defaults, emphasising the need for careful consideration when taking on this responsibility.

Who is eligible for guarantor car finance? 

When it comes to this type of financing, almost everyone is eligible. However, there are some crucial requirements for everyone. If you are over 18 years, you can use a guarantor, often a parent or relative, to apply for car finance for a vehicle purchase.

Young drivers without a credit history are also eligible for guarantor car finance. As a young person, you most likely have no experience in borrowing and paying back. This is where a guarantor comes in handy. Anyone with a poor credit rating can use the services of a guarantor. This includes individuals who had defaulted on loans before or missed any payments.

As long as you are an adult or a UK bank account holder, you can apply for a loan. A guarantor allows you to get the latest car models and get a better deal. If you are self-employed without a regular income, lenders might not approve your application. For example, if you are newly self-employed, you may not have enough years of accounts to prove your income. In these circumstances,  using a guarantor will greatly improve your chances.

Pros of Guarantor Car Finance

Taking this route when applying for car finance has its advantages. When you have a guarantor, lenders will be more likely to approve your application, knowing that someone will be able to help you in case you have trouble making payments. Here are other pros of guarantor car finance. 

Higher Approval Rate

Once you approach a lender with a guarantor, there's a higher chance that your application will be approved, as you have the backing of someone with an excellent financial history. The application may also be approved faster, meaning you can buy your next car sooner.

Credit Score Cover

Credit score cover with a guarantor refers to the protection provided by a guarantor's strong credit rating when someone with poor or limited credit history applies for a loan or financing. The guarantor's good credit score helps assure the lender that the loan will be repaid, even if the primary borrower's credit history is less than ideal. 

Higher Loan Amount

Due to the cover provided by your guarantor, the lender will trust you more. As a result, you can borrow more cash and afford a more expensive model with better safety, technology, and comfort features. However, make sure that you can afford to pay the amount you intend to borrow. While it's great to have a higher loan amount, it's also important to stay within your budget. 

Boost Credit Rating

Your credit score could improve significantly if you pay off the loan without any defaults and missed payments. Therefore, making sure you make the payments on time is advisable. If this is your first time borrowing money from a lender, see to it that you build a good record of paying your loan on time. It will help a great deal in your future loan applications.

Cons of Guarantor Car Finance

There are many advantages to having a guarantor when applying for car finance. However, we should also discuss the disadvantages of this type of financing. When you know the pitfalls to look out for, you will be able to weigh your options and decide what's the best way to finance your car. 

Guarantor Relationship

Defaulting the monthly payments means that your guarantor will have to pay back the loan on your behalf. Failing to service the loan will most likely hurt your relationship due to the broken trust. Furthermore, even if your relationship breaks down before you pay off the loan, they will still be liable to help if you fail to meet the repayments. In worse scenarios, both of you might end up in court for the defaults.

Higher Interest Rates

Although your guarantor may have a remarkable credit score, lenders still perceive this type of car finance arrangement as high-risk. As a result, you may face higher interest rates for the loan, which can increase the overall cost of borrowing. This is due to the added uncertainty associated with applicants who require a guarantor, as they typically have a history of financial difficulties or limited credit experience.

Damage to Both Credit Scores

Failure to make the loan payments not only impacts your credit score but also has repercussions for your guarantor. Any delays in meeting your monthly repayment obligations can result in negative consequences for both your and your guarantor's credit ratings, making it crucial to maintain a consistent payment schedule.

Impact on Future Loan Applications

Once you damage both your credit scores, it significantly impacts your future loan opportunities. You both could have a tough time accessing any form of financial arrangement in the future. That's why if your finance application has been approved, take it as an opportunity to show that you are a trustworthy borrower and you can pay your loan on time. 

Final Thoughts

Before you decide whether to get guarantor car finance or not, consider all the pros and cons first. The involvement of a third party can sometimes make borrowing much easier for you. As long you both meet the guarantor requirements, lenders should have no problem processing your car loan. Best of luck! 

**Please note that Carmoola does not currently offer guarantor finance, but we love to help you with all your questions related to car finance