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Loans may be secured by goods, or by other people - known as guarantors. It's important to understand what this means.


A guarantor is someone who takes on responsibility for the debt of another person's loan. Lenders can ask for a guarantor if a borrower doesn’t meet their lending criteria.

That means if the borrower doesn't keep up with repayments, the guarantor may be required to pay. If the guarantor has any property listed as security against the debt, this could be repossessed.

Before entering into a guarantor agreement, a lender must give the guarantor two documents: a copy of the information provided to the borrow, and a copy of the terms of the guarantee.

Think twice before agreeing to be a guarantor for anybody and get independent legal advice - there are risks involved.




When it comes to borrowing there are two types of loans: secured and unsecured. If we default on a secured loan, a lender can repossess certain goods to recover the debt. With an unsecured loan, a lender cannot take any of our possessions if we default.

Secured loans include hire purchase deals (where the security is the item purchased with finance) and personal loans (if they are secured by one or more of your possessions).


A lender can repossess items bought on hire purchase or offered as security for a loan, if we fall behind on payments or break any other terms in our contract.

They may only repossess things that are individually identified in the credit contract.

Repossessions must only be carried out between 6am and 9pm Monday to Saturday by a licensed repossession agent.

Repossessions must be specifically authorised in the credit contract.