No, if you have signed an agreement and are acting as the guarantor for a guarantor loan, you cannot stop being this until the loan term has ended. Although guarantor loan periods can last a long time, and your relationship with the borrower may change within this period, you cannot stop becoming their guarantor until the loan has been paid off in full.
Whilst you can’t stop being a guarantor, the loan period can be shortened by making an early repayment. This will be cheaper than paying over the course of the loan’s repayment period, as it will reduce the amount of interest that has accrued on the loan.
Many lenders will offer guarantors a “cooling-off” period at the beginning of the loan. During this period (typically the first two weeks) the lenders will allow you to change your mind on the loan and return the funds with no charges added.
The money from a guarantor loan is typically sent to the guarantor first. Once this money has been sent over, the lenders then often give the guarantor up to two weeks to decide whether to send the money off to the main borrower or return it and cancel the loan.
This is the only period where a guarantor can opt out of being a guarantor. After this period is over, they will then have to carry out this role until the end of the loan period.
You cannot change who your guarantor is, as the details of the guarantor are so integral to the application and thereby the loan. Some of the main features lenders will assess when evaluating a guarantor include the following:
The loan’s success can often heavily rely on the guarantor’s personal details, such as their employment status, their income and credit history. These details all go into how trustworthy the lenders deem the application to be, the guarantor showing that they are able to keep up with the loan repayments if the main borrower cannot.
If the guarantor was then replaced with one who has a lower credit score or a less stable income it could compromise the lender’s trust in the loan being paid off.
In the unfortunate event that your guarantor dies before the end of the loan repayment period, the guarantor may be replaced by their spouse. Depending upon the loan contract and the requirements that the guarantor has agreed to, the lender could also be entitled to their estate and other assets to help make up the loan repayments. This is, of course, only if the main borrower cannot keep up with the repayments themselves.