Worried about your chances of approval for a personal loan? If you’re self-employed, have bad credit and/or you don’t have any assets you may still be able to apply for a personal loan with the help of a guarantor. 

What is a guarantor personal loan?

A guarantor is a third party, usually a family member or close friend, who agrees to take on the risk when you take out a personal loan. Put simply, a guarantor is someone who guarantees your personal loan repayment using their own money or assets.  

Because a guarantor is wearing the risk, if the borrower can’t make the repayments or defaults on the loan, the guarantor will assume financial responsibility for the money borrowed.

Having a guarantor on your personal loan may help to lower the interest rate. This is because you’re seen as less likely to default with someone is acting as security against your loan. A lower interest rate means that the loan will cost you less to repay, which could also help you pay it off faster.

What are the responsibilities of a guarantor?  

A guarantor is responsible for making sure a personal loan is paid back in full, including interest, fees and other charges. If the borrower can’t make repayments, the guarantor may be asked to pay off the balance. Furthermore, any security on the loan may be seized to ensure it’s paid off, such as a car or other assets.  

Before deciding on being a guarantor, you need to know: 

  • What is the loan for? 
  • How much is the loan? 
  • How often will the borrower make repayments, whether weekly, fortnightly or monthly? 
  • Will this loan impact the guarantor’s credit rating?

It might be worthwhile getting your own legal and financial advice to make sure that being a guarantor doesn’t limit your ability to get your own loan down the track. Financial and legal responsibilities aside, going guarantor can impact relationships if things don’t work out. Consider how this might play out before you agree to anything. Keep in mind also that guarantors do not hold any right to own the items bought with the loan.  

How do guarantor personal loans work?

Guarantor personal loans work by having a borrower nominate an agreed-upon third party to back up their application. Both the borrower and guarantor will have their finances reviewed and be assessed on whether they can meet loan repayments.  

Borrowers that have a bad credit history, are self-employed or have an irregular income can find it hard to get a personal loan. This is where a guarantor can help. A guarantor can help you meet the criteria for a personal loan you’d otherwise not fulfill. Further, as you’ve got an extra guarantee on your personal loan, the lender may see you as a lower risk and give you a lower interest rate.

Having someone act as guarantor on a personal loan is a big responsibility for both parties. Even if the borrower pays the loan back diligently, it will still appear on the guarantor's credit file. This can affect their ability to secure credit cards and other loans in the future. 

Who can go guarantor on a personal loan?

Guarantor personal loans follow similar eligibility criteria as all personal loans, including:

  • All parties must be over 18 
  • All parties must be living in Australia 
  • All parties must be Australian citizens, permanent residents or hold eligible visas 
  • All parties must receive regular income and/or be employed

If your proposed guarantor is retired they may still be eligible. They just need to prove they have a regular source of income, such as a pension, and can afford to repay the loan if necessary. They may be able to provide security in the form of assets, such as equity in a home.  

Every lender has their own set of eligibility criteria. Before you apply for a guarantor personal loan, it’s important to compare the different loans, interest rates and options on the market.  

What types of guarantor personal loans are available?

There are two main types of guarantor personal loans: secured and unsecured.

Secured guarantor personal loans

This is where your guarantor can use their car, property, jewellery, boat or caravan as security against the personal loan if you don’t have any. The upside of this is that lenders may lend you higher amounts. As the guarantor is nominating a valuable item as collateral, the loan becomes less risky and the interest rate can also go down. The potential downside is that if you default on your loan repayments, the lender can seize the asset to recoup the money you owe.

Unsecured guarantor personal loans 

This is where you or your guarantor are not required to secure an asset against the loan. There are still serious implications for both you and your guarantor if you default on an unsecured personal loan. Unsecured guarantor personal loans tend to be riskier which means that they have a higher interest rate.

Which lenders offer guarantor personal loans? 

Guarantor personal loans are few and far between compared to guarantor home loans. Unfortunately, RateCity does not have a wide variety to compare just yet. However, you can always speak with your ideal lender directly and see if they’ll offer you a guarantor personal loan.  


Sort By
Advertised Rate



Comparison Rate*


Monthly repayment


36 months

Loan term

1 year to 7 years

Total repayments
Real Time Rating™


/ 5
Go to site
More details
Advertised Rate



Comparison Rate*


Monthly repayment


36 months

Loan term

1 year to 7 years

Total repayments
Real Time Rating™


/ 5
Go to site
More details


based on $20,000 loan amount for 3 years at 6.47%

Real Time Rating™


/ 5
More Features

Frequently asked questions

Can I get a bad credit personal loan with a guarantor?

Selected lenders will consider personal loan application from a borrower with bad credit if the borrower has a family member with good credit willing to guarantee the loan (a guarantor).

If the borrower fails to pay back their personal loan, it will be their guarantor’s responsibility to cover the costs.

Can you refinance a $5000 personal loan?

Many personal loans, much like home loans, can be refinanced. This is where you replace your current personal loan with another personal loan, often from another lender and at a lower interest rate. Switching personal loans may let you enjoy more affordable repayments, or useful features and benefits.

If you have a $5000 personal loan as well as other debts, you may be able to use a debt consolidations personal loan to combine these debts into one, potentially saving you money and simplifying your repayments.

Do student personal loans require security?

While some personal loans can be secured by the value of an asset, such as a car or equity in a property, student personal loans are often unsecured, with higher interest rates.

Some lenders also offer guarantor personal loans to students. These loans have lower interest rates, as a guarantor (usually a relative of the borrower with good credit) will guarantee the loan, taking on the financial responsibility if the borrower defaults.

What is a personal loan?

A personal loan sits somewhere between a home loan and a credit card loan. Unlike with a credit card, you need to sign a formal contract to access a personal loan – however, the process is easier and faster than taking out a mortgage.

Loan sizes usually range from several hundred dollars to tens of thousands of dollars, while loan terms usually run from one to five years. Personal loans are generally used to consolidate debts, pay emergency bills or fund one-off expenses like holidays.

Should I get a fixed or variable personal loan?

Fixed personal loans keep your interest rate the same for the full loan term, while interest rates on variable personal loans may be raised or lowered during your loan term.

A fixed rate personal loan keeps your repayments consistent, which can help keep your budgeting consistent, without worrying about ending up out of pocket if your rates were to rise. However, on a fixed loan you’ll also potentially miss out on more affordable repayments if variable rates were to fall.

What is the average interest rate on personal loans for single parents?

Like other types of personal loans, the average interest rate for personal loans for single parents changes regularly, as lenders add, remove, and vary their loan offers. The interest rate you’ll receive may depend on a range of different factors, including your loan amount, loan term, security, income, and credit score.

What is a bad credit personal loan?

A bad credit personal loan is a personal loan designed for somebody with a bad credit history. They have higher interest rates than regular personal loans and are also harder to access.

Can unemployed single parents get personal loans?

It can be more difficult for unemployed borrowers to successfully apply for a personal loan. Most lenders require borrowers to have a regular income available to cover the cost of loan repayments. If you’re self-employed, or if less than half of your income comes from Centrelink, you may not be eligible for some personal loan offers – consider contacting the lender before applying. >

How much can you borrow with a bad credit personal loan?

Borrowers who take out bad credit personal loans don’t just pay higher interest rates than on regular personal loans – they also get loaned less money. Each lender has its own policies, but you’ll find it hard to get approved for a bad credit personal loan above $50,000.

What is debt consolidation?

Debt consolidation is the process of rolling several old debts into one new debt – usually to save money or for the sake of convenience.

What is an unsecured bad credit personal loan?

A bad credit personal loan is ‘unsecured’ when the borrower doesn’t offer up an asset (such as a car or jewellery) as collateral or security. Lenders charge higher interest rates on unsecured loans than secured loans.

What can I use a bad credit personal loan for?

Generally, bad credit personal loans can be used for one or more of the following purposes:

  • Debt consolidation
  • Paying bills
  • Buying vehicles
  • Moving expenses
  • Holidays
  • Weddings
  • Education

Some lenders restrict how their bad credit personal loans can be used as part of their commitment to responsible lending – be sure to check before applying.

Can I get an easy/instant personal loan?

Some lenders are able to approve applications over the internet and within minutes. However, there is a catch. People who take out easy/instant loans generally pay higher interest rates and are restricted to lower amounts than people who follow a traditional borrowing process.

Can I repay a $3000 personal loan early?

If you receive a financial windfall (e.g. tax refund, inheritance, bonus), using some of this money to pay extra onto your personal loan or medium amount loan could bring you benefits, such as reducing the total interest you’re charged on your loan, or clearing your debt ahead of schedule.

Check your loan’s terms and conditions before putting extra onto your loan, as some lenders charge fees for making extra repayments, or early exit fees for clearing your debt ahead of the agreed term.

Can I get a fast loan if I’m unemployed or on Centrelink?

Even if a lender has no credit checks, they will usually still need to confirm you can afford to repay a fast loan on your income before they’ll approve your application.

If 50% or more of your income comes from Centrelink payments, you may find it more difficult to have a fast loan application approved. Consider checking with the lender before applying to confirm if they lend to people on Centrelink.

Can I get a fast loan with bad credit?

Some lenders offer fast loans to borrowers with bad credit. Providers of small payday loans of up to $2000 or medium amount loans of up to $5000 may have no credit checks, though these lenders will usually want to confirm you can afford their loans on your income.

What do single parents need for a personal loan application?

Much like applying for other personal loans, applying for personal loans for single parents will likely require the following:

  • Proof of identity
  • Proof of residence
  • Proof of income
  • Details of assets (e.g. car, home)
  • Details of liabilities (e.g. credit cards, other loans)
  • Loan amount
  • Loan term

Are there alternatives to $2000 loans?

If you need to borrow $2000 or less, alternatives to getting a personal loan or payday loan include using a credit card or the redraw facility.

Before you borrow $2000 on a credit card, remember that interest will continue being charged on what you owe until you clear your credit card balance. To minimise your interest, consider prioritising paying off your credit card.

Before you draw down $2000 in extra repayments from your home, car or personal loan using a redraw facility, note that fees and charges may apply, and drawing money from your loan may mean your loan will take longer to repay, costing you more in total interest.

How long does it take to get a $5000 loan?

Depending on the lender, personal loans and medium-amount loans for $5000 can sometimes be approved in under an hour, and give you access to the money the same day. Other loans may take 24 hours or longer to assess your application, and you may not get the money for a few days.

What causes bad credit history?

Bad credit history is caused by filing for bankruptcy, defaulting on your debts, falling behind on your repayments and having loan applications rejected. Lenders are wary of borrowers who demonstrate this sort of behaviour, because it suggests they might struggle to repay future loans.