How Does Guarantor Car Finance Work?

If you’re struggling to get the car finance you need to get behind the wheel, a guarantor may be able to help.

Car finance is a popular way to buy a new vehicle without paying the full cost of the car all at once. However, all lenders will have their own specific eligibility criteria you’ll need to meet.

If for whatever reason you don’t meet the eligibility criteria, a guarantor can sometimes step in to help give an additional layer of security to a lender 👍

Guarantor car finance is not that common and it’s not something that all lenders will offer, so it’s important to do your research. Carmoola does not offer guarantor car finance currently.

Here we explore how guarantor finance works, who it applies to, and who can become a guarantor 😀

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How does guarantor car finance work?

A guarantor acts as a safety net for the lender. They provide peace of mind that a car finance loan will be repaid if you fail to make the repayments yourself.

Your chosen guarantor for car finance should be someone you trust, and someone who trusts you.

You should also make sure they understand the financial commitment of being a guarantor.

In some cases, the lender may provide the loan to the guarantor themselves to pass on to the borrower.

Before approving guarantor car finance, lenders will carry out a full credit check on the guarantor to assess their finances.

This ensures they are able to comfortably repay the loan amount and can handle the financial responsibility.

Who is suitable for guarantor car finance?

Guarantor finance is accessible to a wide range of people, but it may not be suitable for everyone.

Generally, it is set up to help those who:

  • Are over 18 and do not have a strong credit history
  • Have a poor credit score
  • Are self employed
  • Have irregular income

Young drivers or those new to credit can particularly benefit from guarantor finance. Without a credit history, lenders are unable to determine how trustworthy you are as a borrower.

Drivers with a poor credit score, including those who have previously defaulted on loans, will also find it easier to get guarantor car finance.

Lenders always want to see proof that you can afford the repayments. So, if you don’t have a regular set income, guarantor finance can provide reassurance.

Eligibility criteria for being a guarantor

When selecting a guarantor for car finance, it's essential to know the criteria they need to meet. While this will differ between lenders, generally a guarantor needs to be:

  • Someone you trust
  • Aged 21 or over
  • Someone with a good credit history
  • A homeowner (preferred, but not always mandatory)

Trust is vital in this type of finance, so guarantors tend to usually be close family or friends.

Age is also important, with most guarantors being over 21, although some lenders accept people over the age of 18.

One of the most important eligibility factors is a good credit history. If the guarantor has a poor score, you’ll find it difficult to get accepted.

While home ownership isn't always required, it can provide additional assurance to lenders.

Renters can also be guarantors, provided they have lived at the address for at least three years, and they have a good credit score.

As a guarantor, being linked to a person who (more likely than not) might have a poorer credit score may impact on future loan applications. Applying for car finance on behalf of another party will typically result in a hard credit search which may affect your credit score.

It’s also worth noting the risk of your credit score being negatively impacted should either party fail to keep up with repayments.

More credit guides

Before applying for guarantor car finance, it's useful to weigh up the pros and cons.

Having a guarantor means someone else promises to cover your payments if you can't. This is a huge responsibility, so you need to think how it affects them, as well as yourself.

Make sure everyone involved understands what it means to be part of a guarantor car loan.

Pros and cons of guarantor car finance

To help you decide if guarantor finance is right for you, here’s a list of the pros and cons to consider:


  • Higher chance of securing finance.
  • Potentially a higher loan amount
  • Potentially boosts your credit score


  • Risk to your guarantor relationship
  • Likely higher interest rates
  • Potential damage to both credit scores

Guarantor car finance can significantly increase your chances of loan approval, potentially leading to higher borrowing limits and improved credit scores over the duration of your loan.

However, it carries risks such as strained relationships, higher interest costs, and the potential for damaging both your and your guarantor's credit, if you miss any payments.

This could also affect your chances of getting accepted for credit in the future.

Right now, Carmoola doesn’t offer guarantor car finance. However, we do consider all circumstances. So, if you have a poor credit score or a limited credit history, we may still be able to help.

Download our app, answer a few simple questions, and see if you are eligible for a loan without  impacting your credit score.

We specialise in used car hire purchase to suit a wide range of budgets. So, give us a go and see how affordable car finance can be 😎🚗

FAQs About Guarantors for Car Finance:

Does it affect your credit score to be a guarantor?

Being a guarantor can affect your credit score. If the primary borrower defaults and you fail to make payments, it can negatively impact your credit score.

What are the risks of being a finance guarantor?

The risks of being a finance guarantor include being liable for repayments if the primary borrower defaults and potential damage to your credit score. You may also face possible legal action if payments aren't made.

What is Guarantor Car Finance?

Guarantor car finance is a loan where a third party, usually a family member or close friend, agrees to guarantee the loan repayments.