What is a guarantor on a car loan?

A guarantor is a person who agrees to take responsibility for a loan if the borrower does not make his or her payments. This is a “guarantee” that in the event of a default, the guarantor will be a “fall back” to pay off the loan in their place. Guarantors can be anyone such as friends, family, or colleagues. However, they should know that their money is on the line if they agree to be a guarantor. Guarantors help people with bad credit, younger people with no credit history, pensioners, or people on Centrelink benefits get approved for car loans.

How do you know you need a guarantor?

There is no “one size fits all” situation when it comes to needing a guarantor. However, guarantors are often used in situations when a borrower is seen as a high risk to lenders, even if they have good finances otherwise.

This could be:

If your situation resembles one of these categories, your loan application may benefit from having a guarantor.

  • Students or apprentices buying their first car
  • New arrivals to Australia who do not have any credit history
  • Young adults that are new to the workforce
  • Pensioners and Centrelink benefits recipients
  • People with low credit scores or bad credit

Compare car loans and calculate your repayments

LenderProduct NameAdvertised RateComparison RateMonthly Repayment
SavvyNew Car Loan2.85%
fixed
3.93%$537.06
Bank of AustraliaUsed Car Loan6.45%
variable
6.66%$586.28
ANZOnline Secured Car Loan7.85%
fixed
8.70%$606.14
CUAFixed Rate Car Loan7.99%
fixed
8.29%$608.15
BankSASecured Fixed Personal Loan8.49%
fixed
9.39%$615.35
St GeorgeSecured Fixed Personal Loan8.49%
fixed
9.39%$615.35
CBASecured Car Loan8.49%
fixed
9.54%$615.35
NABVariable Rate Personal Loan14.19%
variable
15.06%$701.01

* Commercial loan with the loan amount of $40,000 is looking at a 5 year secured fixed rate of 2.85% p.a. and comparison rate of 3.93% p.a.. WARNING: all fees and charges may not be included on the example above, only the comparison rates, monthly repayment and total cost applies. Therefore, the total cost of the loan might be different. Comparison rate do not include broker fees, redraw fees, early termination fees and fee waivers. Comparison rate may change as a result of the different loan terms, fees and the loan amounts. Establishment fees and monthly fees do not apply to commercial loans, only consumer loans. However, there might be different fees apply.

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Why choose Savvy?

Flexible options for people who need a car loan that’s backed by a guarantor.

Guarantor friendly loans
Struggling to get approved for a car loan? We find flexible loans for guarantor-backed loans.
Online applications
Begin your application for a guarantor car loan online – it’s easy! We approve within 24 hours.
We work with you
Our dedicated loan consultants work with you and your guarantor and answer all your questions.