(Updated 9 August 2023)

The financial and personal stress of guarantor loans

The financial and personal stress of guarantor loans

Guarantor loans are becoming increasingly popular with people who have a poor credit rating and may need the help of a friend or family member to borrow funds. The way this works, is that the person borrowing the money asks someone to guarantee the loan so that if they can’t pay it, the guarantor has to step in and make payments. Unfortunately, this can leave you in a tricky situation if they fall on hard-times and the guarantor is left with the burden of a loan they didn’t borrow. It can be extremely hard on relationships.

It can also reduce your options if you’re looking for ways to manage your debts because a lot of debt solutions don’t allow you to leave any debts out, meaning that your guarantor would definitely have to take over the payments. This may leave you with only the option of a debt management plan, or even no solution at all. If you’re looking for debt advice, you do this online or you can contact us on 01925 599400.

If you’re in this situation, it can be extremely stressful but, there may be things you can do.

Firstly, speak to the loan company directly and discuss your concerns. Don’t feel you need to hide away if you have changes in your circumstances, approach your loan company and see what help and support they can provide you. One of the biggest guarantor loan companies in the UK states that they’d much rather work with you directly to get things back on track and that they don’t want to make you worse off. They also say that, as long as it’s ‘right for the account’, they can put an arrangement in place until your circumstances improve.

If you’ve already tried this and you don’t think they’ve acted fairly, you can make a complaint. They’ll have 8 weeks to respond but if they don’t, or if you’re unhappy with the response, you can escalate your complaint to the Financial Ombudsman.

Complaints about guarantor loans

The amount of complaints made to The Financial Ombudsman Service about guarantor loan companies has increased a lot lately, with issues being raised by the both borrowers and guarantors.

A lot of these complaints relate to the affordability of the loans. The reason for this is that when the loan company agrees to lend the money, they should check that the repayments are affordable for both the borrower and the guarantor.

These checks should include asking about income (including getting proof, like a wage slip) and regular spending like your mortgage, rent, household bills, food and travel, and should check with credit reference agencies to see if there are any other credit commitments, and whether these are being paid. Again, this goes for both the borrower and the guarantor.

They should also recheck the affordability of both the borrower and the guarantor before making any top-up loans, to ensure neither person’s situation had worsened, and that they can afford the increased repayments.

If lenders fail to carry out appropriate checks on both the borrower and the guarantor, it may be possible to have the guarantor removed.

Some examples of complaints received by the Ombudsman are:


  • I shouldn’t have been given the loan because I couldn’t afford it and the lender should have known this at the time
  • My financial circumstances have changed, and I can no longer afford to make the repayments to my loan but the lender isn’t treating me fairly
  • The lender won’t let me include this loan in an Individual Voluntary Arrangement (“IVA”) or bankruptcy
  • My guarantor has been contacted too quickly


  • I didn’t agree to be a guarantor
  • I was pressured or forced into being a guarantor
  • It wasn’t properly explained that being a guarantor meant I had to make the payments if the borrower didn’t
  • The lender should never have accepted me as a guarantor because I couldn’t afford to make the payments
  • The lender should never have given the loan to the borrower in the first place
  • My circumstances have changed, and I can no longer afford to make the payments
  • The lender is threatening to take me to court
  • The lender is pestering me for payment

Between October and December 2019. The Financial Ombudsman Service received 535 new enquiries about guarantor loans and 90% of the complaints they dealt with were upheld so, if you’re struggling, it’s definitely worth a try.

Don’t have an account with us and are looking for debt advice?

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Angel Advance provides online debt advice to get you back on track and make your finances more manageable.

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