Guarantor Role

  1. If the borrower cannot pay back the loan, the guarantor is responsible for making the monthly repayments
  2. Helps if they are a home-owner with approval
  3. We only check that the guarantor can afford the loan, not the borrower


Who makes a good guarantor?

A close friend or family member, someone who knows you and trusts you will keep up with your repayments. If for any reason you do not repay the loan, it will become the Guarantor’s responsibility, so they are taking on a significant financial responsibility if you don’t make the repayments and could be liable for the full outstanding debt. They need to understand this before they commit to act as your Guarantor.

An ideal candidate for a Guarantor could be:

  • Parents
  • Auntie / Uncle
  • Daughter / Son
  • Grandparents / Brother / Sister

Requirements of the Guarantor

  • Can be anywhere in Canada except ALBERTA
  • Aged 19 to 75 at the time of the loan
  • Good Credit
  • Ideally a homeowner (but we don’t secure the loan against their property)
  • Can afford to and is willing to make payments if the Borrower doesn’t

Do they need to be a homeowner?

Not in all instances. If a Guarantor has a strong credit rating and credit score, they do not always need to own a property. Some higher loan amounts may however require the Guarantor to be a homeowner. The loan is not secured against their property, but if you fail to pay and the Guarantor doesn’t pay, we may need to take legal action again one or both of you, and this may involve us asking the court to make a charging order against any property they own.

Paying out the loan

Loans are paid out into the guarantor’s bank account. This is to prevent fraud and give you the option of changing your mind before you transfer the money to the borrower.

What happens if the borrower doesn’t pay the monthly payment?

First we will contact you to have you help us connect with the borrower, if we get them back on track with the payments, that’s great. Otherwise the guarantor must bring the arrears up to date.

How does this affect my credit score?

We will look at your credit file to make sure that you are financially stable and haven’t had trouble paying back your bills in the past. This will not affect your credit score held with the credit reference agencies. Anyone searching your credit file wouldn’t be able to see if you’re a guarantor on the loan, or even that you’re linked to the borrower.

The one time you could find your credit file and score affected is if both you and the borrower refuse to pay and we are forced to take court action, where the court judges that you must pay and you still refuse. In these circumstances, after 28 days the court will record the judgment on your file.

We write back details of the loan to the borrower’s credit file with major credit reference agencies. If paid on time this will help them to build their credit score and eventually they’ll be able to borrow from other lenders.

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