Car finance is now the most popular way to fund the purchase of a new car, with the used car market quickly catching up. Being able to spread the cost of your car across a few years can mean you get access to a better car sooner than you would if you had to pay for it outright.

But, if you have a bad credit history, or aren’t able to prove yourself as a potential customer, you might worry about missing out on this as a viable option. The good news is that you can use a guarantor to help you get approved for your finance package. Here’s how it works.

What is a guarantor?

A guarantor is, in essence, someone who ensures that the finance agreement will be paid. This is normally a family member or friend who will also be held responsible for making the repayments. They will be expected to step in and make the payments if, for whatever reason, the person who took out the car finance agreement is unable to do so.

To be a guarantor, you normally have to be a homeowner or have an excellent credit rating. Depending on the lender, you have to be either over 18 or over 21. They will also have to go through the same identity and income checks as the person taking out the finance package.

How does guarantor car finance work?

Guarantor car finance works in the same way as a normal car finance application. The only difference is that you will have to provide information for yourself and your guarantor. The guarantor will also have to agree to take on the repayments if you are unable to do so.

You will still need to be assessed as a customer, and any ethical car finance provider will carry out affordability checks to ensure the package you are taking out can be repaid without the use of the guarantor.

The biggest advantage of using a guarantor is that you can effectively borrow their good credit rating to get yourself approved. Guarantor car finance is in essence a personal loan. Hire Purchase and Personal Contract Purchase are not normally available on a guarantor car finance agreement.

What does the guarantor get out of the deal?

There are no financial incentives that are used to entice someone to be a guarantor. It is purely a personal decision, and we would recommend you don’t make any promises to someone you hope to be a guarantor. It’s important that you choose someone you can trust and who is financially stable. It’s a big responsibility, so don’t be too disappointed if someone is uncertain about agreeing to the idea.

The benefits are all with you, the person taking out the package, as you can often get a better deal by using a guarantor, and then you can also improve your credit rating by making the repayments.

How do I apply for guarantor car finance?

Apply for a car finance package as you would normally, and see if there is an option on their application form to nominate a ‘guarantor’. If you have any questions, call and speak to someone at the finance provider (at Creditplus, you get a dedicated customer advisor when you apply). They will be able to talk you through the process and explain what the exact requirements for your circumstances may be. Once you’ve completed all the checks and provided all the information, you’ll be on the road to your new car.