Guarantor and Joint Loans
Guarantor and Joint Hirer Loans
If you have only just started to purchase cars and have no or very little credit history, or you are under the age of 21, most lenders will ask for either a guarantor or a joint hirer.
Most dealers do not take the time to explain the differences between these two types of agreements, however they have very different implications for the person acting as either the guarantor or the joint hirer.
A Guarantor loan works in the same way as most other forms of finance, but in this case there is a third party involved who takes on the final responsibility for your loan. Most importantly, they are guaranteeing the loan will be repaid. The guarantor will only be chased if the borrower defaults on the monthly repayments.
How is a guarantor loan different to a joint hirer loan?
As a joint hirer you have equal responsibilities and the right to drive the vehicle as you are effectively a co-hirer. Also, adding a joint hirer can strengthen the credit rating of the person applying for the loan as the lender assesses the risk based on the financial credit worthiness of both hirers.