What is a Guarantor on a Loan?

Posted: Tuesday, November 20th, 2018

When it comes to financing in the St. Louis area, the details can be tricky. There’s a lot to know about the financing process, and we understand that it can feel overwhelming if you’re just starting the car-buying process. If you’re having trouble securing financing for a new or used vehicle near Florissant, guarantor loans might be a solution.

Understanding Guarantor Loans

If you have good credit for car financing and are financially stable, you serve as  your own guarantor on your loan. However, these loans are also a way to help you borrow money if you’re having issues getting approved by the traditional methods. If you have a limited credit history, have a low credit score, just started a job, or have a low salary, you can ask someone to be your guarantor for loan agreement.

Your guarantor promises to pay back your automotive loan if you can’t, so this person should be someone you know well who will be willing to help you out. Parents often serve as guarantors for their children to help them purchase vehicles.

That said, anyone can be a guarantor if they’re 21 years old or older, if they have good credit, and if they have financial stability. You can ask a parent, friend, aunt, uncle, grandparent, or significant other. This person will be on your loan until it’s paid in full, so make sure to have a thorough conversation before making any decisions.

Cosigner vs. Guarantor

A cosigner is equally liable for the loan. If someone cosigns your loan, it means you’re both responsible for the payments. If you can’t make your payments, your cosigner must.

A guarantor serves as a secondary method of payment. The guarantor is only liable for your automotive loan if you, the primary borrower, are unable to pay and you’ve exhausted all of your options.

Is a Guarantor Loan from Green Light Auto Credit Right for You?

To learn more about guarantor loans for vehicle shopping around Herculaneum, you can contact us online. We’ll be happy to explain this loan type in more detail and help you understand what’s involved.

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