Your Guide to Guarantor Car Loans
What Are Guarantor Car Loans?
If securing a car loan feels like a steep mountain to climb, a Guarantor Car Loan could be your safety rope. In essence, it’s similar to a personal loan, but you get a helping hand from a guarantor—someone who’s got your back if you can’t make repayments.
Who Should Consider This Option?
We do offer Guarantor Car Loans at Oasis Motor Finance, if you’re navigating the murky waters of bad credit or have no credit history, this option might be your lifeboat. It’s especially useful for young drivers or those dipping their toes into car finance for the first time. Plus, timely repayments could give your credit score a much-needed boost.
Guarantor Car Loans: How Do They Work?
In a Guarantor Car Loan, your guarantor acts as your financial co-pilot. The loan amount is usually paid to them first, and then they pass it on to you. From there, it’s your job to make the loan repayments directly to the lender.
What Sets It Apart?
Unlike conventional loans where it’s just you and the lender, Guarantor Car Loans bring a third party into the mix: your guarantor. Essentially, they promise to cover the loan repayments if you default, adding an extra layer of reassurance for the lender.
Credit Rebuilding: A Silver Lining
If you manage to stay on top of your payments, Guarantor Car Loans can help improve your credit score. It’s a win-win situation for those struggling with credit issues.
Guarantor Car Loans for Young Drivers
Young drivers often face the catch-22 of needing credit history to get a loan but not having any because they’re, well, young. A guarantor can bridge this gap, as lenders will consider their credit history in addition to yours.
Who Can Be a Guarantor?
Selecting a guarantor is a big decision. It should be someone you can have candid financial discussions with. Typically, guarantors are close family or friends who are financially stable and have a good credit score. Age requirements usually range from 18 to 75.
What’s at Stake for the Guarantor?
Being a guarantor isn’t just a verbal agreement—it’s a legal commitment. If you default, the guarantor’s credit score can take a hit, and in some cases, their property could be at risk.
Guarantor Credit Checks: A Must
Yes, guarantors will undergo a credit check. Lenders need to ensure they are reliable and financially capable of stepping in if needed.
Can You Be a Guarantor with Bad Credit?
No, a poor credit score disqualifies someone from being a guarantor. Lenders look for guarantors who provide financial stability, which is generally reflected in a good credit score.
Homeownership: Is It Necessary?
The requirements can vary among lenders. Some may insist on a homeowner guarantor, while others might be fine with long-term renters who have a sterling credit history.