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for a credit score of
Advertised Rate

5.95

% p.a

Fixed up to 7.49%

Comparison Rate*

5.95

% p.a

Fixed up to 10.79%

Company
Monthly repayment

$912

36 months

Loan term

2 years to 3 years

Total repayments
Real Time Rating™

4.29

/ 5
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Total repayments for a 3-year, $30,000 loan at 5.95% would be $32,831*. Terms from 2-3 years

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Personal loan lenders we compare at RateCity

Learn more about personal loans

Summary

  • 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.

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.

Does the guarantor need a good credit score?

Because the guarantor is the individual who the risk falls on, credit providers will typically expect them to have a good credit score. Guarantors with bad credit could push some of that risk back onto the lender, which is why an application with such a guarantor listed would likely be rejected.

Can a guarantor save you money?

The way in which having a guarantor on your personal loan might save you money is in interest charges. If you have a bad credit score, it’s unlikely you’ll be offered a very competitive interest rate on your loan. However, if you have a guarantor who has a good credit score, your chances of being offered a competitive interest rate will likely increase.

A lower interest rate will mean less money spent on interest charges, but don’t forget to compare fees and features as well.

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. 

Is there a risk to the guarantor?

Acting as guarantor for a family member or friend does come with a certain level of risk that should be considered prior to signing on the dotted line. By agreeing to act as guarantor, you are essentially agreeing to wear the risk of losing whatever assets you’ve put up as collateral – money or otherwise.

It’s important to ensure you have plenty of confidence in the financial responsibility of the borrower you are acting as guarantor for, as you may lose your assets if they default on the loan. Plus, your credit score could also take a hit.

If you can’t find a guarantor, what options do you have?

In many circumstances, it can be difficult to find someone to act as guarantor on a loan due to the level of risk they would take on should you not be able to meet your repayments. If this is the case for you, you could consider the following alternatives:

  • A joint personal loan: If you have a partner or family member who is willing to co-sign the loan with you, one option is to apply for a joint personal loan together as co-borrowers. Co-borrowers are equally liable for repaying the loan, and if the other individual’s income combined with your own gets you over the minimum income threshold, for example, it could be an option worth considering.
  • An unsecured personal loan: Although unsecured loans tend to have higher interest rates than secured loans, they don’t rely on the borrower to offer up assets at collateral. If your lack of assets is what’s preventing you from being eligible for a loan, then an unsecured loan could potentially help with that issue.
  • An instant-approval loan: Sometimes called ‘payday loans’ or ‘cash loans’, instant-approval loans provide borrowers with access to small amounts of money, usually up to $2,000, over a short loan term of up to one year. Instant-approval loan providers typically have more relaxed lending criteria, so it can be easier for some to be approved. However, instant-approval loans do tend to come with much higher interest rates, fees, and penalties, so it’s important to do your research before applying for one.
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.

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.

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.

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.

Is a personal loan a variable or fixed-rate loan?

Depending on the personal loan lender, you may be able to choose between a fixed and a variable interest rate. But, there are a few distinct differences between the two, so it’s important to weigh up the pros and cons before deciding on what’s right for you.

A fixed interest rate loan gets you the convenience of knowing exactly how much you need to repay each fortnight or month. On the other hand, you generally won’t be able to make lump sum or advanced payments to close your personal loan early - or at least not without a penalty.

With a variable interest rate personal loan, you may be able to get a longer loan repayment term, with the option of paying off the loan early. You typically won’t need to pay any additional charges for an early full repayment either. The potential disadvantage with an interest rate that can change is that your repayment is not entirely predictable, as it can fluctuate with the market. However, you’ll likely have more options as more lenders offer a variable interest rate personal loan.

Does refinancing a personal loan hurt your credit score?

Personal loan refinancing means taking out a new loan with more desirable terms in order to access a more competitive interest rate, longer loan term, better features, or even to consolidate debts.

In some situations, refinancing a personal loan can improve your credit score, while in others, it may have a negative impact. If you refinance multiple loans by consolidating these into one loan, it could improve your credit score as you’ll have only one outstanding debt liability. Your credit may also improve if you consistently pay the instalments on time.

However, applying to refinance with multiple lenders could negatively affect your credit if your applications are rejected. Also, if you delay or default the repayment, your credit score reduces.

Can I merge my personal loan with my home loan?

Yes, you can refinance your home loan and, in the process, merge or consolidate your personal loan and home loan. By doing so, you can lower the number of debts you have, and you may also reduce the total interest you have to pay.

However, you should consult a financial advisor or a mortgage broker to confirm that you are decreasing your total outstanding debt, including interest payments. The repayment term for a home loan can be much longer than that for a personal loan, and by merging the two, you could be repaying a higher amount over the full term.

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.

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.

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.

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 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.

Can I include my spouse’s income on a personal loan?

If you apply for a joint personal loan with your spouse, you can include their income on the application. If approved, they then become jointly liable for the loan.

Both you and your spouse need to meet the eligibility criteria, such as income, age, and residency requirements, as stipulated by the lender. A joint loan could increase your chance of approval for a higher amount, as both borrowers’ incomes are assessed when determining borrowing capacity. 

Are there low doc personal loans?

Self-employed borrowers may be eligible for low doc personal loans, which require less documentation in their application process than many other personal loan options.

It’s important to remember that though low doc personal loans may require less paperwork, you may need to provide additional security, or pay a higher interest rate.

Will comprehensive credit reporting change my credit score?

Comprehensive credit reporting may change your credit score, either positively or negatively, depending on an individual's situation.

Under comprehensive credit reporting, credit providers will share more information, both positive and negative, about how you and other Australians manage credit products. That means credit reporting bureaus will be able to make a more thorough assessment of everyone’s credit behaviour. That will lead to higher scores for some consumers and lower scores for others.

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).

What can quick loans be used for?

Many borrowers use quick loans to cover short-term or urgent costs, such as paying for car repairs, medical bills, or replacing broken appliances or electronics. Quick loans often have high interest rates compared with regular personal loans.

Before applying for a quick loan, consider your other available options, such as working out a payment plan or applying for an advance or extension. 

Can you pay off a quick loan early?

Many lenders will allow you to make extra repayments onto a quick personal loan when you can afford them, or even exit the loan early, which can help reduce the total interest you are charged. Be sure to check your quick loan’s terms and conditions, as some lenders charge early exit fees for paying off a loan ahead of schedule.

How long do personal loans take?

Depending on the lender, some personal loan applications can be approved in as little as one hour, or you may need to wait until the next business day. If approved, you may receive your money on the same day, the next business day, or within the week.

Can I get an easy/instant personal loan?

Some lenders are able to approve applications with little documentation and within minutes. However, there is a catch. People who take out easy/instant loans generally pay higher interest rates and are restricted to lower amounts than people who follow a traditional borrowing process.