• A guarantor is someone who guarantees your personal loan to the lender by agreeing to take on the loan’s risk.
  • Because the lender’s risk is lowered, it may help boost your chances of approval for a personal loan, or of getting a lower interest rate.
  • A guarantor is usually an immediate family member, but a lender may sometimes allow a relative or close friend.
  • It is a heavy financial responsibility to act as a guarantor or have someone go guarantor for you. Make sure you weigh up the pros and cons before you make any financial decisions.

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Heritage Bank


36 months

1 year to 5 years


/ 5
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36 months

1 year to 7 years


/ 5
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P&N Bank


36 months

2 years to 5 years


/ 5
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36 months

1 year to 7 years


/ 5
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36 months

1 year to 7 years


/ 5
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36 months

1 year to 7 years


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36 months

1 year to 7 years


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Learn more about personal loans

If you need extra funds to pay for a holiday, car, home renovations or to consolidate your credit card debt, a personal loan can be one way to access the cash you need.

But if you’re self-employed, have bad credit or don’t have any assets, your chances of getting approved for a personal loan might be lower in some instances, even if you know you can afford the debt. With the help of a guarantor though, you might be in a different situation.

What is a guarantor personal loan?

When you apply for a personal loan, the lender will work out your ability to pay back the loan. Lenders will look at your income, credit history, employment and assets. If you don’t meet certain criteria, or if your personal loan application gets rejected, this is where a guarantor can help.

By having a family member or friend act as a guarantor, they’re essentially co-signing the loan and agreeing to accept responsibility for the repayments if you default. A guarantor basically acts as a type of security, making it less risky for your lender to loan you funds.

Generally speaking, having a guarantor on your personal loan might help your chances of getting your application over the line, or lower your interest rate, because the loan is less risky. A lower interest rate means that the loan will cost you less, which could help you pay it off faster.

It’s important that you do your research and make sure you can afford to pay back your personal loan before you apply.

What is a guarantor?

A guarantor is a third party, usually a family member, who agrees to take on the risk when you get a personal loan or another kind of loan. Put simply, a guarantor is someone who guarantees your personal loan using their own money or assets. Because a guarantor is wearing the risk, if the borrower can’t make the repayments or defaults on the loan, the guarantor will assume financial responsibility for the money borrowed.

Pros and cons of a guarantor personal loan
  • Can help your approval chances for a personal loan you’d otherwise not be eligible for.
  • The lender may see you as a lower risk and give you a better interest rate.
  • Big responsibility for both parties.
  • Might damage relationships if things don’t work out.

Types of guarantor personal loans

When it comes to personal loans, having the option of a guarantor is generally a feature and not a separate type of personal loan. When you apply for a personal loan with some lenders, you can choose to have someone act as guarantor.

There are two main types of guarantor personal loans on the market.

Secured guarantor personal loans

If you’re looking to borrow funds and you don’t have any assets, your guarantor can use their car, property, jewellery, boat or caravan as security against the personal loan. The upside of securing an asset to a personal loan is that you get access to funds you might not have been able to borrow. Because the guarantor is nominating a valuable item as collateral, the loan becomes less risky and the interest rate could go down. The potential downside is that if you default on your loan repayments, the lender can seize the asset to recoup the money you owe.

Unsecured guarantor personal loans

If you opt for an unsecured guarantor personal loan, you or your guarantor are not required to secure an asset against the loan. This doesn’t mean you can borrow money and never pay it back – there are serious implications for both you and your guarantor if you default on an unsecured personal loan. Unsecured guarantor personal loans tend to be riskier which means that they have a higher interest rate.

Before you decide on a secured or unsecured personal loan, you should still do your research and compare the different types of guarantor personal loans on the market.

Who can go guarantor on a personal loan?

Depending on the size and type of personal loan, each lender has their own exact criteria over who can act as guarantor on a personal loan.

While some lenders might restrict the role of guarantor to a borrower's parents or immediate guardian, other lenders might be a little more relaxed and accept other relatives, siblings or grandparents. Although quite unusual, there are some lenders who will accept friends and colleagues as guarantors, as long as you can prove the relationship is strong.

Guarantors must meet the same lending criteria as other potential borrowers. This can be different for every lender, but generally the criteria are:

  • Be over 18 years of age.
  • Be a citizen or permanent resident of Australia.
  • Have a good credit rating.
  • Be able to prove their income and employment.
  • Be able to show sufficient savings and have an asset they can put up as security against the personal loan.

Things you need to know as a guarantor

If you’re considering acting as a guarantor on a loan for a loved one, you’re committing to a big financial responsibility. Before you decide to go guarantor on a loan, make sure you understand what exactly you’re signing up for. Here are some things you need to understand before you agree to anything:

  • Even if the borrower pays the loan back diligently, it will still appear on your credit record. This may affect your own ability to secure credit cards and other loans in the future.
  • Going guarantor can impact relationships if things don’t work out. Consider how this might play out before you agree to anything.

If you’ve decided to act as a guarantor for someone, there are a few things you can do to help safeguard your interests before signing the dotted line:

  • Understand the details of the loan that the borrower is taking out, including loan amount, loan term, interest rate etc.
  • Assess how secure the borrower’s current income and employment is, as well as the risk of them defaulting.
  • Consider how much you’d have to pay in a worst-case scenario and how this could potentially impact your other financial commitments. 
  • It might be worthwhile getting your own legal and financial advice to make sure that going guarantor doesn’t affect your own chances of being approved for a loan down the track. 

Please note:

Our site currently has limited data on guarantor personal loans.

ClearLoans Australia offers a Guarantor Personal Loan for borrowing between $3000 and $15,000, to be repaid over a term of 1 to 5 years.

To find out whether the personal loans in the following table are available as guarantor loans, please contact the lenders directly. We’ve shown you these personal loans to help you compare what’s available in the Australian personal loan market, and make a more informed financial decision.

Frequently asked questions

Can I get a bad credit personal loan with a guarantor?

Some lenders will consider personal loan applications from a borrower with bad credit if the borrower has a family member with good credit willing to guarantee the loan (a guarantor).

If the borrower fails to pay back their personal loan, it will be their guarantor’s responsibility to cover the repayments.

Can you refinance a $5000 personal loan?

Much like home loans, many personal loans can be refinanced. This is where you replace your current personal loan with another personal loan, often from another lender and at a lower interest rate. Switching personal loans may let you enjoy more affordable repayments, or useful features and benefits.

If you have a $5000 personal loan as well as other debts, you may be able to use a debt consolidations personal loan to combine these debts into one, potentially saving you money and simplifying your repayments.

What is a personal loan?

A personal loan sits somewhere between a home loan and a credit card loan. Unlike with a credit card, you need to sign a formal contract to access a personal loan. However, the process is easier and faster than taking out a mortgage.

Loan sizes typically range from several hundred dollars to tens of thousands of dollars, while loan terms usually run from one to five years. Personal loans are generally used to consolidate debts, pay emergency bills or fund one-off expenses like holidays.

What is a bad credit personal loan?

A bad credit personal loan is a personal loan designed for somebody with a bad credit history. This type of personal loan has higher interest rates than regular personal loans as well as higher fees.

Can I repay a $3000 personal loan early?

If you receive a financial windfall (e.g. tax refund, inheritance, bonus), using some of this money to make extra repayments onto your personal loan or medium amount loan could help reduce the total interest you’re charged on your loan, or help clear your debt ahead of schedule.

Check your loan’s terms and conditions before paying extra onto your loan, as some lenders charge fees for making extra repayments, or early exit fees for clearing your debt ahead of the agreed term.

What is the average interest rate on personal loans for single parents?

Like other types of personal loans, the average interest rate for personal loans for single parents changes regularly, as lenders add, remove, and vary their loan offers. The interest rate you’ll receive may depend on a range of different factors, including your loan amount, loan term, security, income, and credit score.

Do student personal loans require security?

While some personal loans can be secured by the value of an asset, such as a car or equity in a property, student personal loans are often unsecured, which typically have higher interest rates.

Some lenders also offer guarantor personal loans to students. These loans have lower interest rates, as a guarantor (usually a relative of the borrower with good credit) will fully or partially guarantee the loan, taking on the financial responsibility if the borrower defaults.

Should I get a fixed or variable personal loan?

Fixed personal loans keep your interest rate the same for the full loan term, while interest rates on variable personal loans may be raised or lowered during your loan term.

A fixed rate personal loan keeps your repayments consistent, which can help keep your budgeting consistent. You won't have to worry about higher repayments if your rates were to rise. However, on a fixed loan you’ll also potentially miss out on more affordable repayments if variable rates were to fall.

How much can you borrow with a bad credit personal loan?

Borrowers who take out bad credit personal loans don’t just pay higher interest rates than on regular personal loans, they also get loaned less money. Each lender has its own policies and loan limits, but you’ll find it hard to get approved for a bad credit personal loan above $50,000.

How long does it take to get a student personal loan?

Completing an online personal loan application can often take anywhere from 10 minutes to 1 hour. Depending on your lender, processing your personal loan application may take anywhere between 1 and 24 hours. If your personal loan application is approved, you may receive the money in your bank account the following business day, or, in some cases, the same day.

How can I get a $3000 loan approved?

Responsible lenders don’t have guaranteed approval for personal loans and medium amount loans, as the lender will want to check that you can afford the loan repayments on your current income without ending up in financial hardship.

Having a good credit score can increase the likelihood of your personal loan application being approved. Bad credit borrowers who opt for a medium amount loan with no credit checks may need to prove they can afford the repayments on their current income. Centrelink payments may not count, so you should check with the lender prior to making an application.

What do single mothers need to apply for a personal loan?

Like other personal loan applicants, single mothers will likely need to provide a few documents to any potential lender, such as personal identification, bank statements (savings, loans, credit cards), proof of address, and proof of income (payslips, tax returns).

How can I improve my credit rating/score?

Your credit score will improve if you demonstrate that you’ve become more credit-worthy. You can do that by minimising loan applications, clearing up defaults and paying bills on time.

Another tip is to get the one free credit report you’re entitled to each year – that way, you’ll be able to identify and fix any errors.

If you want to fix an error, the first thing you should do is speak with the credit reporting body, which may take care of the problem or contact credit providers on your behalf.

The next step would be to contact your credit provider. If that doesn’t work, you can refer the matter to the credit provider’s independent dispute resolution scheme, which would be the Australian Financial Complaints Authority (AFCA).

AFCA provides consumers and small businesses with fair, free and independent dispute resolution for financial complaints.

If that doesn’t work, your final options are to contact the Privacy Commissioner and then the Office of the Information Commissioner.

What's a credit report?

A credit report is a record of your credit history, which covers your credit enquiries, borrowings and your repayments. The report will include information about any bankruptcies or other relevant legal judgements. It will also include biographical information such as your address, date of birth, driver's licence number and employment history. 

How long are $3000 loans?

Medium amount loans can be repaid between 16 days and 2 years. Many personal loans have terms between 1 year and 5 years, though some are as short as 6 months while others last for 10 years.

Generally, the shorter a loan’s term, the more expensive your regular repayments may be, but the less total interest you’ll pay. Loans with longer terms mean more affordable repayments, but more interest charges over the full term.

Do $4000 loans have no credit checks?

Many medium amount loans for $4000 have no credit checks and are instead assessed based on your current ability to repay the loan, rather than by looking at your credit history. While these loans can appear attractive to bad credit borrowers, it’s important to remember that they often have high fees and can be costlier than other options.

Personal loans for $4000 are more likely to have longer loan terms and will require a credit check as part of the application process. Bad credit borrowers may see their $4000 loan applications declined or have to pay higher interest rates than good credit borrowers.

Is it hard to improve your credit score?

It can be hard to improve your credit score, as it usually requires sacrifice and discipline, but hard doesn’t necessarily mean complicated. Some simple ways you can give your credit score a boost include closing extra credit cards, reducing your credit card limit, pay off any loans and make loan repayments on time.

As a general rule, the lower your credit score, the more remedies you can apply and the greater the scope for improvement.

What is comprehensive credit reporting?

Comprehensive credit reporting is a system which includes both positive and negative information on a person’s credit file. Before comprehensive credit reporting was introduced, only negative information was included.

When was comprehensive credit reporting introduced?

Comprehensive credit reporting was introduced to make credit reports fairer and more accurate. Under the previous system, credit providers only saw negative information about potential borrowers. Now, they're able to see both positive and negative information, which means that credit providers can see if a borrower’s negative credit behaviour is consistent or a mere one-off.

Can I get a $4000 personal loan if I’m unemployed or on Centrelink?

Before most providers of personal loans or medium amount loans will approve an application, they’ll want to know you can afford the loan’s repayments on your current income without ending up in financial stress. Several lenders don’t count Centrelink benefits when assessing a borrower’s income for this purpose, so these borrowers may find it more difficult to be approved for a loan.

If you’re unemployed, self-employed, or if more than 50% of your income come from Centrelink, consider contacting a potential lender before applying to find out whether they accept borrowers on Centrelink.