What is a Guarantor Loan?

A guarantor loan is a type of loan that requires a guarantor to co-sign the loan agreement. The guarantor is someone who agrees to take responsibility for the loan repayments if the borrower is unable to pay. This provides additional security for the lender, as they have someone else to turn to for payment if the borrower defaults. Guarantor loans are often used by individuals with a poor credit history or limited credit score, as having a guarantor can increase their chances of being approved for a loan. However, it is important for both the borrower and the guarantor to understand the terms and conditions of the loan agreement, as the guarantor will be legally obligated to repay the loan if the borrower is unable to do so.