Guarantor Frequently Asked Questions

1. What is a Guarantor loan? A guarantor loan is a type of unsecured loan. The loan is not secured against a property. The Borrower will, however, need a Guarantor. This is usually a close friend or family member who can vouch for the Borrower. 2. What is the role of the Borrower? The Borrower must pay the loan repayments for the term of the loan until the loan has been repaid. 3. What is the role of a Guarantor? The Guarantor agrees to support the Borrower in times of difficulty by making any missed repayments or paying the balance of any part payments made by the Borrower. 4. What is the role of the Platform? The Platform must ensure that the loan is affordable for the Borrower throughout the term of the loan. The Platform must also ensure that the Borrower’s creditworthiness is assessed. The Platform, however, recognises that life events happen which mean that the Borrower may not always be able to make a repayment on time or in full. The Platform must therefore ensure that the loan repayments are not only affordable for the Borrower but also for the Guarantor as well. 5. How is affordability assessed? The same process is followed for the Borrower and the Guarantor. Each will be taken through an income and expenditure assessment by telephone. The assessment will include information of regular income that can be evidenced on a bank statement. All outgoing will be documented which will include rent or mortgage payments, existing credit commitment, utilities bills and everyday living expenses. We ask that the Borrower and Guarantor give an honest refection of their financial situation 6. How is affordability verified and creditworthiness assessed? Both the Borrower and the Guarantor will be asked to provide a recent 30-day bank statement. A credit report will be obtained. Both will be used to verify the information provided during the affordability assessment. A general assessment of creditworthiness will be made based on the information gathered, and questions asked to both borrower and guarantor. 7. What are the responsibilities of the Borrower? Before applying for a loan, the Borrower must ensure the loan repayments are affordable. The Borrower should go through the affordability of the loan with the Guarantor so that the Guarantor is fully aware that the Borrower is able to make the repayments in full for the term of the loan. We expect a Borrower to answer questions during the process honestly, as some of these are relied upon for the assessment. 8. What are the responsibilities of the Guarantor? The Guarantor should, before committing to being the Guarantor, discuss the cost of the loan repayments with the Borrower to satisfy themselves that the Borrower can afford the repayments throughout the term of the loan. The Guarantor should also ensure that they are aware that they are equally responsible for the loan repayments as well as the Borrower. This means that if the Borrower is unable to make the repayment or makes a part repayment the Guarantor is responsible for any missed repayments, or the balance of the part repayments until the loan has been repaid. We expect a Guarantor to answer questions during the process honestly, as some of these are relied upon for the assessment. 9. What are the responsibilities of the Platform to the Guarantor? Not only must the Platform ensure that the loan is affordable for both the Borrower and the Guarantor, they must also advise the Guarantor of the risks of being a Guarantor and the likelihood of having to make one or more than one repayment(s) based on their current statistics. 10. How will the Platform advise the Guarantor of the risks and likelihood of having to make a payment? Before the Guarantor signs the Guarantee and Indemnity the Platform will, based on the Borrower’s affordability and creditworthiness assessment and loan application, provide the Guarantor information about the risks and likelihood of having to make one or more than one repayment. 11. As the Guarantor, what should I do with the risk and likelihood information? When you receive the information, you should read it carefully to understand the risks and the likelihood of having to make one or more than one repayment during the term of the loan. Whilst the Platform has assessed that the repayments are affordable for you as the Guarantor, you should also understand the risks and likelihood of having to make the repayment(s).You should discuss the affordability of the loan with the Borrower and satisfy yourself that:

• You understand the risks of being a Guarantor.
• You understand the likelihood of making a one or more than one repayment.
• You understand your responsibilities of being a Guarantor.

12. Will I be kept informed if the Borrower is late in making a payment? Yes. If a payment is missed by the Borrower or the Borrower makes a part repayment the Guarantor will be advised by text, email or telephone. 13. Will being a Guarantor affect my credit rating? You will be advised that a credit check will be made. This will show on your credit file that a search has been made but will not identify the name of the requester. The loan will not show on your credit file. Likewise, if a payment is missed this will not show on your credit file. If the Borrower fails to make a repayment, you will be asked to make the repayment. if neither of you make the repayments when asked the loan will be defaulted. A default notice will be issued to you and the Borrower. This default notice will not show on your credit file. 14. What will happen if the loan is defaulted? After receiving a default notice the Borrower and the Guarantor will have time to make up any outstanding repayments. If these are not paid within the time allowed legal action may be taken. This may result in a County Court Judgment (CCJ) being obtained against the Borrower, the Guarantor or both. 15. As a Guarantor will a County Court Judgment (CCJ) show on my credit file? Yes, a CCJ will appear on the credit report of a Guarantor as well as the Borrower. 16. What will happen if a CCJ is obtained? A CCJ could lead to further legal action being taken. This could include:

1. an attachment of earnings order: An Attachment of Earnings Order (AEO) is where a creditor applies to the court for an order to allow them to take funds direct from your wages, if you fail to keep up repayments on a debt.


2. a property charging order / inhibition order, which could lead to an order for sale: A charging order secures a debt you have with a creditor against your property. This means if you sell or re-mortgage your home before the debt is cleared the charging order will be paid off from the proceeds. A creditor can only get a charging order if they already have a County Court Judgment (CCJ) against you.

and

3. warrant of control: A Warrant of Control authorises Enforcement Agents (Bailiffs) to attend at the judgment debtor’s home or business address. They will collect money (or monies) owed under the judgment debt or remove goods from the home or business to sell at auction.

17. As a potential guarantor what questions will I be asked during the security call? You will be asked the following:

• Are you comfortable that the Borrower will be able to pay all the loan repayments over the term of the loan?
• Are you fully aware that if the Borrower fails to make the loan repayment on the dates due, you will be asked to make the payment yourself?
• Do you understand this could be more than one payment?
• Do you understand that you and the Borrower are equally responsible for the repayment of the loan?
• Is there anything that could impact your ability to repay this loan? For example: this could be illness, redundancy, maternity/paternity leave, change in income such as retirement or change in benefits?
• Can you confirm it was yourself who signed the Guarantee and Indemnity?
• Can you confirm you have read and understood the terms and conditions?
• Can you confirm that you received and read the risk document that was sent to you prior to you signing the Guarantee and Indemnity?
• Do you understand the risk of being asked to make one or more repayments?
• Do you understand the likelihood of being asked to make one or more repayments?
• How after reading the risk document, have you satisfied yourself that the Borrower will be able to pay the loan repayments over the term of the loan?
• Are you being pressured to enter this Guarantee?
• Now that you have been made aware of the likelihood of having to make one or more repayments and the risks of becoming a Guarantor, do you still wish to proceed?