Guarantor Personal Loans

Get approved for your personal loan with the help of a guarantor by comparing your options with Savvy to find the right one for your needs.

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, updated on October 4th, 2023       

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Looking to apply for a personal loan with the help of a guarantor? It's always important to survey the market before committing to your personal loan, which you can do right here with Savvy. Find the best loan for your needs by comparing from a variety of offers around Australia here.

What is a guarantor personal loan?

A guarantor personal loan as a product is no different to any other standard personal loan, with the key difference being the presence of a guarantor. This is someone in your life, such as a parent or close relation, in a stronger financial position that agrees to guarantee the payment of your loan. This means that if you default on your personal loan, your guarantor will take on its repayments until it’s fully paid out.

It’s important to note, though, that this only comes into effect if you fully default on your loan. If you’re able to keep on top of your repayments, as the vast majority of borrowers do, your guarantor won’t become involved in the loan’s payment at all. While they may be asked to utilise their assets, such as equity in their home or a vehicle, as part of this arrangement, full control of these will revert back to the guarantor at the conclusion of your loan.

Aside from this, though, your loan will be the same as any other personal loan: you can be approved for any amount up to $100,000 and repay that over one to seven years on a monthly, fortnightly or weekly basis. However, what sets guarantor loans apart from the rest is the way in which they can maximise your borrowing power and help you access a low-cost deal to suit your needs, with the reduced risk of having a guarantor enabling lenders to offer lower interest rates.

What loan types can I use a guarantor for?

There are two main types of personal loans where a guarantor can come in handy: secured and unsecured personal loans. There are key differences between the two of these, so it’s important to understand how they work before applying.

Unsecured personal loans

The most common type of personal loans, unsecured finance is available to anyone without the need for you or your guarantor to provide a valuable asset as collateral for the loan. Loan amounts are available from as little as $2,000 all the way up to $75,000, with your approved amount depending on what you can comfortably afford (although lenders may be willing to grant loans beyond your standard affordability with a guarantor).

Secured personal loans

Unlike unsecured loans, secured loans do require that either you or your guarantor put forward an asset as collateral for your loan. Because of the added security, the maximum borrowing power sits at $100,000 (with a minimum of $15,000) and interest is offered at a substantially lower rate than an equivalent loan without security. As such, these loans are useful for larger sums of money and for borrowers (and guarantors) who have eligible assets at their disposal and want to reduce the cost of their finance deal.

Types of personal loan

Why compare personal loans through Savvy?

How to apply for a guarantor personal loan

Frequently asked questions about guarantor personal loans

Will a guarantor guarantee the success of my application?

No – even with a guarantor, lenders won’t guarantee approval on any personal loans that they offer. This is because they’re subject to responsible lending guidelines enshrined in Australian law which they must abide by, the most important of which dictates that they can’t green light a loan that they’re not sure you can repay.

For example, if your lender only felt you were capable of repaying a $15,000 loan but you asked for $30,000, they wouldn’t be able to approve you for that amount.

What’s the difference between a guarantor and a co-borrower?

Unlike a guarantor, a co-borrower is involved in the process of repaying your personal loan alongside you. Arrangements of this nature are most commonly taken out by couples who are looking to consolidate or cover shared expenses and repay the loan together. These will also increase your chances of approval, borrowing power and lower your interest rate.

Can I take my guarantor off my personal loan?

Yes – if your guarantor decides not to be involved in your personal loan, you can cancel it prior to receiving your funds or repaying the entire amount if you haven’t spent any yet. You may also be able to refinance to another personal loan product which doesn’t include a guarantor with a different lender during your term and pay your existing loan out early. You may incur fees for doing so, however.

Does having a guarantor impact the growth of my credit score?

No – even if you have a guarantor on your loan, your credit score will appreciate at the same rate as it would if you were repaying the loan as the sole member of the agreement. Credit reporting agencies and lenders will look to your repayment history, which won’t reflect the presence of a guarantor if you don’t default and allow you to build your credit score as a result.

Does a personal loan impact a guarantor’s credit file?

It can – the personal loan will show up on your credit file even if you aren’t involved in the repayments, which could (in theory) make it more difficult for you to get approved for other finance in the future. Additionally, if your borrower defaults on the loan and you’re unable to repay it, a default would go on your credit file and could severely damage your score.

Will I be able to access 100% finance with a guarantor?

Yes – there’s no obligation for you to supply a deposit on any personal loans, regardless of whether you have a guarantor attached. As such, you can access 100% financing for whatever you need provided you can afford to make repayments.

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.