Guaranteed Personal Loans

Looking to improve your loan approval chances? Compare personal loan options which allow for guarantors here with Savvy.

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, updated on October 4th, 2023       

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How does a guaranteed loan work?

Guaranteed loans are simply secured personal loans which utilises security provided by a third party, known as the guarantor (such as a parent or family member). This can sometimes involve the guarantor providing an asset as collateral. In the same way as regular secured loans, this asset can be a new or used car, equity in a property or, less commonly, high-value assets of other sorts such as jewellery or rare metals.

Guaranteed loans are necessary in some cases, as potential borrowers may need to access funds but might not be eligible to borrow the amount they’re looking for. This may be because their borrowing power doesn’t match their needs or that they’ve struggled with credit previously.

In the event you default on your repayments, your guarantor will be responsible for covering your debts. Once the loan has been repaid in full, your guarantor will be released from your agreement and will simply retain full control of the asset provided as collateral, with no future obligations towards either yourself or your lender.

Once your initial loan has been resolved, you might find that you’ve built positive credit reporting, which can increase your score and make it easier for you to get approved for loans in the future, perhaps even at lower rates and without guarantors.

What is the best way to compare guaranteed loans?

When comparing personal loans, there are some fundamental points which are important to consider, including the following:

Interest rate:

In order to keep the overall cost of your loan to a minimum, you should make sure that you target a loan with the lowest possible interest rate. Even small differences in your rate could end up saving you hundreds of dollars over the life of your loan. For example, a $30,000 personal loan repaid over five years at 7.5% p.a. would cost approximately $6,068.31 in interest. However, increasing that rate by 1.5% to 9% p.a. would raise the total cost by almost $1,300 to $7,365.04. Opting for a guaranteed personal loan can help you access lower interest rates than you otherwise would've been eligible for.


There’s a range of fees that can be charged on your personal loan. The two most common are ongoing monthly fees and application fees, which can set you back between $0 and $10 per month and $0 and $595, respectively. It’s important to compare loans based on fees as, like interest rates, seemingly insignificant differences can help you save in the long run. Additionally, most loans come without penalties for early repayments, but you should always double-check to make sure.


Depending on the nature of your situation, you might wish to find a loan that offers features such as redraw facilities, customisable repayment frequency or early repayment options. If you can find a loan that includes these at little or no extra cost, this might be an attractive option for you. It’s important to bear in mind that you should only look to secure extra features if you intend to use them, as you may be paying for something that serves no use to you otherwise.

Eligible assets:

You will need to make sure that the assets which are eligible to be used with your financier are in line with the assets available to your guarantor to offer as security. For example, your guarantor might not be comfortable offering equity in their home as security, so will only be able to offer funds in a fixed-term deposit. Your lender will need to be willing to approve of these particular assets in order for your loan application to be successful.

Length of loan term:

Because your guarantor will still want to maintain their own financial flexibility for the future, you should consider the most appropriate loan term for both you and them. This will entail making sure that the loan term will be suitable relative to your ability to make your repayments, as well as your guarantor’s preference for how long they’re willing or able to have their asset ‘locked in’ to your agreement (the asset is unable to be sold or replaced whilst serving as security).

Borrowing range:

It's important when looking at the maximum amount of financing available to you that it doesn’t exceed the value of your guarantor’s assets which are being used to secure the loan. For example, if your guarantor has a vehicle worth $4,000 that they’re willing to offer as security, you’ll need to make sure potential lenders offer this amount with an accommodating minimum borrowing range.

Types of personal loan

Why compare personal loans through Savvy?

Learn more about guaranteed personal loans with our frequently asked questions

How much can I borrow with a guaranteed personal loan?

Personal loans vary significantly in terms of their potential borrowing power. While unsecured loans generally range from $2,000 to $75,000, attaching your guarantor’s asset can increase this range to $15,000 all the way up to $100,000. Your personal borrowing power will depend on factors such as your income and expenses, your credit file and the value of the asset used to secure your loan.

Is there any rule about who can or can’t guarantee my personal loan?

In terms of your relationship with your guarantor, there aren’t any restrictions on who can fill the role within reason. This could be a family member, close friend or even a business associate, although it is most common for guarantors to be relatives. Your guarantor will also need to be over 21 years old, have a strong credit score and be in a positive financial position. Most importantly, though, it’ll need to be someone with whom you have a close enough relationship that they can be relied upon to uphold their end of the deal should your repayments fall through.

Are there any extra costs for taking out a guaranteed loan?

There are no extra fees for taking out a guaranteed loan. Your loan will still be subject to the range of fees typically associated with any other personal loan. However, as mentioned above, your use of a guarantor can help you reduce overall fees and interest.

How long can I take out my loan for?

Personal loans come with potential repayment periods as short as one year all the way up to seven. The loan term you’re approved for will depend on different factors, such as your personal profile and the amount you’re asking to borrow (you won’t be approved for a $5,000 loan over seven years, for example).

Am I certain to be approved for my personal loan if I can provide a guarantor?

No – while a guarantor can greatly improve your chances of success, you still aren't guaranteed approval. Ultimately, this decision is still at the discretion of your lender and if they aren't comfortable with the amount of perceived risk present in lending to you, they may still decline to approve your application.

Is it possible to get a guaranteed personal loan if I’m unemployed?

Yes – it’s possible to obtain a guaranteed small personal loan if you are unemployed but receiving income through Centrelink, a pension or other means. You’ll be more restricted in terms of your choice of lender, as well as the amount of finance you can access, with most companies offering a maximum borrowing limit of $5,000. Above all else, though, you’ll need to show that you can afford to cover your loan’s repayments.

Should I apply for a personal loan with my partner instead?

You can – applying for a joint personal loan is often a great alternative to seeking out a guarantor for your personal loan. These are generally more common and are sometimes simpler to organise, as it’s simply a regular personal loan application co-signed by you and your partner. Lenders also see these as safer loans, as they rely on two sets of income compared to one.  

Helpful personal loan guides

Still looking for the right personal loan?

Personal loans come in all shapes and sizes, so read more about the ways you can use them, as well as how they might work for you.