Can I get car finance with a guarantor?

Car finance with a guarantor involves a third party, typically a family member or close friend, who agrees to take responsibility for repaying the loan if the borrower fails to make payments. This option is often used by people with limited credit history or poor credit scores to increase their chances of being approved for finance. Here’s how it works:

The Borrower’s Role:

• • The borrower applies for the car finance and is responsible for  making the monthly repayments
  • The car is registered in the borrower’s name (or the name specified in the finance agreement)

The Guarantor’s Role:
The guarantor co-signs the finance agreement, committing to repay the loan if the borrower defaults.

• • The guarantor needs to have a strong credit history and demonstrate financial stability.
  • They will not own the car, but their financial responsibility lasts until the loan is fully repaid.

How the Process Works:

1. 1. Application: The borrower applies for the car finance, providing all necessary documents.
   2. Guarantor’s Approval: The guarantor undergoes a credit check and affordability assessment to ensure they can cover the payments if needed.
   3. Agreement Signing: Both the borrower and guarantor sign the finance agreement.
   4. Loan Repayment: The borrower makes the monthly repayments as agreed. The guarantor steps in only if the borrower cannot pay.

Key Benefits:

• • For the Borrower:
    • Easier approval for car finance with poor credit or no credit history
    • Access to potentially lower interest rates compared to standard bad credit loans.
  • For the Lender:
    • Reduced risk, as the guarantor provides an extra layer of security.

Risks for the Guarantor:

• • If the borrower defaults, the guarantor is legally obligated to repay the remaining balance, including any fees or penalties.
  • Non-payment can affect the guarantor’s credit score and financial standing.
  • They are tied to the agreement until the loan is repaid, which could impact their ability to secure credit for themselves.

Common Requirements for a Guarantor:

• • Be over 21 years old (age requirements vary by lender).
  • Have a good credit score and regular income.
  • Be a resident in Ireland (or as per the lender’s requirements).
  • Not be financially linked to the borrower (e.g., not a spouse in some cases).

Is It Right for You? Car finance with a guarantor can be a good solution if you struggle to qualify for finance alone. However, it’s essential for both the borrower and guarantor to understand their obligations fully and trust each other to meet the repayment terms.