What are the risks for a guarantor?

The guarantor is legally responsible for the full loan amount if you default. Their credit score is affected, and they may be sued or have assets seized. They should only guarantee if they can afford to repay the entire loan.

Can I remove a guarantor later?

Yes, many lenders allow guarantor release after 12-24 months of on-time payments, once you've demonstrated the ability to manage the loan independently.

Who can be a guarantor?

Most lenders require guarantors to be close family members (parents, siblings, sometimes grandparents), Australian residents, and have a good credit history and stable income.

Does being a guarantor affect credit score?

Yes. The guaranteed loan appears on the guarantor's credit report and counts towards their borrowing capacity. If payments are missed, it damages their credit too.

Guarantor Loan Calculator

Calculator

Calculate the benefits and risks of having a guarantor on your personal loan

Free to useNo data storedAI insightsUpdated: February 2026

A guarantor can help you get approved for a loan or secure a better rate. This calculator shows the potential savings and helps you understand the serious responsibilities involved for both you and your guarantor.

Enter Your Details

Real-World Examples

Recent Graduate

Emma just started working and has no credit history. Her mum agrees to guarantee a $10,000 loan.

Inputs Used:

amount:10,000withoutRate:18withRate:8

With mum's guarantee, Emma saves $2,600 in interest and builds her own credit history for future independence.

Credit Recovery

Mike had financial trouble 3 years ago. His sister offers to guarantee a $15,000 debt consolidation loan.

Inputs Used:

amount:15,000withoutRate:declinedwithRate:12

The guarantor allows approval. Perfect payments will help rebuild Mike's credit for future loans without help.

Frequently Asked Questions

Glossary

Guarantor

A person who legally agrees to repay your loan if you fail to do so.

Guarantee Release

Removing the guarantor from the loan after proving your ability to repay independently.

Joint Liability

The guarantor is equally responsible for the debt and can be pursued for the full amount.

Credit Impact

The loan appears on both the borrower's and guarantor's credit reports.

Related Tools

Secured vs Unsecured

Another way to get better rates without a guarantor

Credit Score Builder

Build credit so you won't need a guarantor next time

Personal Loan Calculator

Calculate repayments with your guarantor rate

How to Use

1Enter the loan amount you need
2Set your preferred loan term
3Add the rate you'd get without a guarantor
4Enter the better rate available with a guarantor
5Select your current approval status and guarantor relationship

Key Information

A guarantor agrees to repay your loan if you can't
Guarantor rates can be 4-6% lower than standard rates
The guarantor's credit is affected by the loan
Most lenders require guarantors to be family members

Pro Tips

Have an honest conversation about the risks before asking someone to guarantee
Set up automatic payments so your guarantor never has to worry
Consider releasing the guarantor after 12-24 months of perfect payments
Some lenders allow partial guarantees to limit the guarantor's risk

Avoid These Mistakes

Not fully explaining the risks to your potential guarantor
Expecting a guarantor to fix approval issues caused by bad credit behavior
Straining family relationships by not treating the arrangement seriously
Not having a plan to release the guarantor as soon as possible

Disclaimer: This calculator provides estimates only and should not be relied upon for financial decisions. Interest rates, fees, and policies change frequently. Always verify information with lenders directly. This is general information, not personal financial advice. Consider seeking advice from a licensed mortgage broker or financial advisor.

Last updated: February 2026