Can I get a loan with a friend as a guarantor?
It is going to be tough to convince lenders and bank institutes that your friend is a good guarantor. Instead of finding friends that can help you financially, it is best to either save the money yourself, over time, or speak to a family member that is older with a higher credit score.
At the end of the day, lenders and banking institutions are money-makers and want to protect the money they let others borrow. This money gathers interest, but if a person does not have a strong credit score, the institute has no way of knowing how trustworthy they are with money.
Some banks and credit institutions do allow friends to be co-borrowers and guarantors. However, the friendship and relationship with the primary buyer should be strong. There is a lot that the other parties can lose from being part of the agreement. The guarantor needs to have equity or property that is similarly valued compared to the loan.
Instead of using a friend as a guarantor, some experts recommend borrowing money from friends. This has a lower risk for both parties. While money can be lost, properties have larger values and equity. It is also possible to destroy a friend’s credit score because of a bad loan or missed repayment.
Friends as a Guarantor Conclusion
Many banking and credit experts do not recommend using friends as a guarantor or as a co-borrower because of how tricky and risky it can be. However, if you do choose to use a friend, always contact a lending specialist first!