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Been asked to be a guarantor!

(26 Posts)
Creole Sat 16-Aug-14 11:10:06

Need some advice on this please before I commit myself. This is for a personal loan of £6k. Thanks in advance

NotALondoner Sat 16-Aug-14 11:15:52

Don't do it.

That's the only advice you need.

lucidlady Sat 16-Aug-14 11:18:51

Who's asked you and what are their circumstances? I think generally advice is not to do it.

rubyflipper Sat 16-Aug-14 11:22:00

Run away!

There was a thread recently about being a guarantor. The overwhelming majority said DON'T DO IT.

There is a reason why you have been asked - and that is because the person cannot get credit anywhere else. If they default on the loan - you will have to pay it off.

Bunbaker Sat 16-Aug-14 11:23:05

Say no. You will be liable if they default on their payments.

Lucked Sat 16-Aug-14 11:27:14

We'll some people can't get credit because they have no credit history rather than a bad credit history. However there is always going to be an element of risk.

I'd only do this for one of my children.

Same here: I'd only do it for one of my children, and even then only if I was in a position to pay the loan if they defaulted.

GemmaTeller Sat 16-Aug-14 11:32:47

No, no matter how much the person promises they will pay the loan back/ can afford it etc,.

If they default you'll get saddled with it.

KillmeNow Sat 16-Aug-14 11:37:31

Do it by all means . As long as you love the person enough to GIVE them £6000 .

If not then politely decline. There are many other ways to obtain credit and if this person cannot access any of them you have to ask yourself why.

PigletJohn Sat 16-Aug-14 12:09:46

You are being asked to be a guarantor because no lender trusts them to pay back the loan, for reason that they know, and you don't.

In a default you will have to pay the £6k, plus accrued interest at probably an extortionate rate, plus default charges. £10k might cover it.

Only agree to be a guarantor if you are willing to give these people £10k and never see it again. In which case make it a gift and save yourself a lot of worry.

gamerchick Sat 16-Aug-14 12:11:59

Can you afford to pay it off if they don't? And would you mind?

If the answers no then you have your answer.

gamerchick Sat 16-Aug-14 12:14:11

Or yes even.

Plus don't you have to be home owners now to guarantee loans?

AlpacaMyBags Sat 16-Aug-14 12:23:36

Do you have 6k available to throw away?

ellenjames Sat 16-Aug-14 12:28:10

No way!! Unless it was one of my children and even then only if I could afford it and knew what it was for! You would have to be mad to consider it!!

IDontDoIroning Sat 16-Aug-14 12:28:19

Do you have £6k spare (more actually if you include any interest so maybe £8 to £10k) that you could afford to give them?
If you do then say yes hope they don't default and everything is great.
If you don't then don't say yes because if they default YOU will be paying that loan back for them.

Good point about interest adding to the sum being guaranteed.

SavoyCabbage Sat 16-Aug-14 12:35:50

I too would only do this for my children.

caroldecker Sat 16-Aug-14 12:53:53

Interest rate is probably extortionate. If you love them enough to guarantee a loan, then borrow the 6k yourself at a reasonable rate and lent it to them yourself. If you are not prepared to do this then do not guarantee it.

NotCitrus Sat 16-Aug-14 13:24:21

If it was for rent, then I've done it a few times for friends as hardly anyone can rent in London without, and landlords have a duty to mitigate their loss so it wouldn't be that much in the worst case scenario.

For a loan? Just no. If it's your best mate needing money to say escape an abusive relationship, borrow it yourself and lend to them, but no way would I guarantee a mystery loan.

WeAreEternal Sat 16-Aug-14 14:10:56

Only do i

WeAreEternal Sat 16-Aug-14 14:12:37

Let's try that again...

Only do it if you can afford to give that person 6K.

No matter how well you know them or trust them you have no idea what may happen in the future.

Creole Sat 16-Aug-14 19:56:25

Thank you all for your messages, you have opened my eyes. I also did a lot of research on it. Great advice all!

BuggersMuddle Sat 16-Aug-14 23:09:00

Not unless you expect to pay it and can afford it.

I could be convinced to help out a DC with a first flat for example (I got similar help whereby parents basically channelled 'rent' into a guaranteed mortgage for me, which was a fantastic help for me and in their view, a better use of money).

A mate though or other relative, I'd be quite concerned. If you are rolling in dough and don't mind, that's one thing. If it's a big deal for you if they let you down, or you're worried about their money management skills I really wouldn't. I would hate to be round someone's house who owes me money and be wondering why they're eating fillet steak / drinking nice wine for example while I'm guaranteeing a missed payment.... That's a completely made up example of course, but if you think they may default and you have to see their lifestyle regularly, it's a consideration.

Fluffycloudland77 Sun 17-Aug-14 08:52:07

I knew someone who did it & the person defaulted so they had to pay up.

She was on a low wage herself but was trying to help a girl escape a violent partner who was trying to get her pg so he could stay in the country.

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