The Public Perception of Guarantor Loans

The guarantor loan industry is growing fast and public awareness of the product is rising along with it. Although they’re actually the ‘original’ loan model, when guarantor loans enjoyed a resurgence after the recession, the UK public was initially slow to accept them as a mainstream form of borrowing. Although inroads have been made, there is still work to be done here.  Current awareness is being helped along in part due to the high-profile television adverts by one of the main guarantor lenders trading at the moment.

The fall in popularity of payday loans is also making a difference; although guarantor loans aren’t a like-for-like substitute to payday, they’re being seen as a more sustainable method of borrowing as well as a way to break free of the payday loan spiral through consolidation.

The future for guarantor loans is currently looking promising, with applications on the up and variations on the standard guarantor loan model being tested and considered. There are a number of large and growing players within the sector who will be looking to out-compete each other in the coming months with lower APRs, more inclusive product variations and branching out to other areas, such as the retail credit market. However, this does not mean automatic success for all – there’s still a long way to go in convincing the public that guarantor loans are the go-to choice.

Part of the issue lies with the ease in which consumers can obtain higher amounts of money from payday lenders (£500+). Citizens Advice analysed feedback from 2000 customers about the payday loan industry, and found that 87% of them were not asked for documents to prove they could afford the loan. In some cases, the application process was so simple that people who were drunk at the time of applying, children and mental health patients were able to get hold of money. When you look at the ease of obtaining a payday loan it is no wonder they are currently the go to choice for those unable to go down more traditional routes.

However, the backlash against payday loans is already in full swing and ‘responsible lending’ is coming to the fore. As consumers begin to realise that payday lenders may not be the best option for them, guarantor loans will naturally move in to take the customers who need a higher amount out of the market. Comparing the APRs will speak for itself, and as long as guarantor lenders continue to make it easier for customers to apply without forfeiting their responsible lending policies, then the future can only be a bright one.

Coral Pearce-Mariner

Coral Pearce-Mariner

Content & Marketing Assistant at UK Credit Coral works for UK Credit (, an established guarantor loan company who have been trading since 2010. Lending to those who may have been turned down elsewhere, UK Credit meet a market need whilst helping customers improve their credit scores. With a strong focus on responsible, fair lending, UK Credit have grown significantly since their launch, and look set to continue this growth during the next few years. To contact Coral you can email her at


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