Guarantor Personal Loans

If you’re finding it tough to get approval, then using someone more established as a guarantor on your personal loan is another option you have available. 

During every loan application, the lender weighs up your ability to manage repayments and your overall risk of default.  This is done by checking income via your employment and any assets you may have. 

If you don’t meet their requirements and have your loan application rejected, a guarantor may shift the outcome in your favour. 

A guarantor will act as security by also becoming legally responsible for loan repayments if you default.  Using a family member or trusted friend are popular options, but there are obvious risks to not only their finances, but your friendships as well. 


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site-logos Harmoney Unsecured Personal Loan
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Borrow up to $50,000 with personalised rates and repay over 3 or 5 years loan terms.

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Earn up to 50,000 Qantas Points with a more rewarding personal loan from Symple

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Guarantor personal loans explained

Personal loan types available with a guarantor

The first thing that needs to be made clear, is that there’s no separate loan option specifically called a guarantor personal loan.  Placing a guarantor on your loan application is simply a feature to help you gain approval for each of the traditional loan types. 

Let’s go over the 2 major loan types you have available and why you may apply for each with a guarantor: 

  • Secured personal loan: If you’re looking to buy a physical asset such as a car, then a secured loan is a popular option.  Having an asset that you and your guarantor can offer as security reduces the lender’s risk and you’ll likely receive a more competitive rate. 
  • Unsecured personal loan: When looking to borrow for things such as a holiday or the like, an unsecured loan is a more likely choice.  When it comes to unsecured personal loans, your guarantor can’t offer an asset as security and therefore this extra risk will mean repayments are higher.  They are however, much more flexible. 

Acting as guarantor on a personal loan

If you’re certain that a guarantor personal loan is the right option for you, there are a few eligibility requirements that both the borrower and guarantor will have to meet.  

To be eligible for a guarantor personal loan in Australia you’ll be required to meet the following: 

  1. You’re at least 18 years old. 
  2. You’re an Australian citizen, permanent resident, or hold the required visa. 
  3. Have a verifiable income. 
  4. Have a good credit rating. 


In order to verify the above criteria, both the borrower and guarantor are going to need the following documentation: 

  1. Drivers license/passport as proof of identity. 
  2. Income statements such as your payslips. 
  3. If retired, you’ll need to prove income from investments. If self-employed, you’ll need your business tax returns. 

Other things to consider surrounding a guarantor personal loan?

Read through our knowledge base to find answers to your questions on guarantor personal loans.

Is a guarantor the same as a co-borrower?

A guarantor and co-borrower are different things.  The difference is explained below: 

  • Guarantor: Someone that becomes legally responsible for repayments only if the borrower can’t meet them. 
  • Co-borrower: with a co-borrower application you’re both equally responsible for repayments from the start because you were assessed together and granted the loan in that manner. 


Will acting a guarantor affect my credit score?

Yes, acting a guarantor is going to have an effect on your credit score.  Any defaults by the borrower on loans you act as a guarantor on, will appear on your credit report and affect you negatively.  If you intend to take out further loans yourself, you may be unable to borrow as much as you need due to the loans you already act as a guarantor on. 

Who should you ask to be a guarantor on a personal loan?

The most popular people to act as guarantor on personal loans are the following: 

  • Parent 
  • Relationship partners 
  • Business partners 


It’s imperative that you understand acting as a guarantor on a loved one’s personal loan can negatively affect your relationships.  Ensure you weigh up the pros and cons of your personal circumstances to ensure it’s the right decision for you and seek legal advice if in doubt. 

Can I remove or be removed as a guarantor on a personal loan?

You can be removed as a guarantor on a personal loan, but this will mean that the entire loan must be reassessed.  The original borrower must now be in a financial position to manage the outstanding repayments on the loan by themselves.  As you’re legally liable for the loan in case of a default, you can’t just be removed as a guarantor because your relationship with the borrower crumbled for whatever reason. 

Is getting a guarantor on a personal loan worth it?

As you can see from our guide to guarantor personal loans, whether it’s worth it or not will entirely depend on your personal situation.  While there are definite risks associated both financially and emotionally, if you’re able to manage the repayments, the benefits of being able to secure a loan at a more competitive rate are undeniable.