Guarantor Loans: Why the Market Has Largely Closed and What UK Borrowers Can Do Next

If you’ve borrowed through a guarantor loan in the past or you were considering one you may have noticed the options have changed significantly. Lenders who once specialised in this type of borrowing have largely withdrawn from the market following regulatory action by the Financial Conduct Authority (FCA), and for many people, that’s left a real gap where a familiar route used to be.

It can feel unsettling when something you relied on, or planned to use, is no longer easy to find. But the near-collapse of the guarantor loan market doesn’t mean you’re out of options it may simply mean those options look a little different now.

This guide explains what happened to the guarantor loan market in the UK, why it closed, and what paths forward could be worth exploring whether you’re managing existing debt, planning a big purchase, or just trying to find a steadier financial footing.

The UK guarantor loan market largely closed between 2021 and 2023 following FCA regulatory action. The market leader, Amigo, ceased lending in 2023 and completed its wind-down in 2025. A small number of FCA-authorised lenders still offer guarantor loans, but the mainstream market has effectively gone. The main alternatives now are unsecured personal loans, credit union loans, debt consolidation loans, and government Budgeting Loans. Existing guarantor loan obligations remain legally valid even where a lender has entered administration.

1. What Were Guarantor Loans, and Who Used Them?

A guarantor loan is a type of unsecured personal loan where a second person usually a family member or close friend agrees to cover your repayments if you can’t make them. The idea was that having a guarantor reduced the lender’s risk, which in turn opened up borrowing to people who might not have qualified on their own credit history alone.

For many borrowers, particularly those rebuilding their credit or working through a period of financial difficulty, guarantor loans felt like one of the only realistic routes available. They often came with interest rates well above those of mainstream personal loans, and the guarantor arrangement placed significant financial responsibility on a third party who was sometimes not fully informed of the commitment involved.

The people who used them most were often managing household budgets carefully, working in sectors like care, retail, or construction, and looking for a way to consolidate existing debts or cover an essential purchase without turning to high-cost short-term credit.

2. Why Did So Much of the Market Close?

The picture changed significantly from around 2021 onwards. Increased regulatory scrutiny from the Financial Conduct Authority (FCA) → put pressure on lenders to demonstrate that their affordability checks were robust both for borrowers and for guarantors. In many cases, the FCA found that guarantors hadn’t been given a clear enough picture of the financial commitment they were taking on.

A wave of complaints and compensation claims followed. Several providers including Amigo, which held the large majority of the market, along with TFS Loans, Buddy Loans and George Banco faced significant redress bills and either exited the market or wound down. The result was that most of the guarantor lending market closed within a relatively short period.

For borrowers who had live loans, this created genuine uncertainty. For those who had planned to use a guarantor loan in the future, it meant going back to the drawing board.

If you have an active guarantor loan with a lender that has entered administration, the administrator appointed to manage the loan book should have written to you with instructions. MoneyHelper’s guidance on what to do if your lender goes out of business → explains what to expect.

3. If You Had an Active Guarantor Loan What Should You Do?

This is understandably one of the most stressful situations. If your lender has stopped trading or entered administration, it doesn’t mean your loan disappears the debt still exists as a legally valid obligation, and an appointed insolvency administrator or claims handler will typically take over managing repayments.

The most important thing is to keep making payments as normal until you’ve received clear written instruction otherwise. Missing payments at this stage could still affect your credit record and may cause difficulties later, even if your lender is no longer actively lending.

If you’re struggling to keep up with repayments, or the situation has left you feeling overwhelmed, free debt advice is available from StepChange → (0800 138 1111) and Citizens Advice → who can help you understand your rights and work through your options without any pressure or cost.

Your guarantor also has rights in this situation. If they’re concerned about what happens next, encourage them to seek independent advice. They are not automatically liable for anything unless the lender has formally contacted them regarding missed payments on your account.

4. What Are the Alternatives Now?

The lending landscape has been changing in other ways too and not just by closing doors. In recent years, more mainstream lenders have broadened their assessment criteria, moving away from a reliance on credit score alone and looking more carefully at a borrower’s full picture: income, spending patterns, employment stability, and overall affordability.

For someone who previously felt a guarantor loan was their only option, this shift could open up routes that weren’t accessible before. The main alternatives worth considering:

Unsecured personal loans. Loans taken out in your own name, without a guarantor. Approval is based on your own creditworthiness and affordability. Rates vary depending on your credit profile but if your circumstances have improved since you last applied for mainstream credit, it may be worth checking what’s available now. Many lenders, including Oakbrook Loans, offer a soft search eligibility check that indicates whether you’re likely to be approved before you formally apply, without it showing as a search on your credit file.

Credit unions. Member-owned financial organisations that exist to serve their communities rather than generate profit. They often have more flexible criteria than traditional lenders and cap their interest rates. If you’re not already a member, it’s worth checking whether there’s one in your area or profession Find Your Credit Union → can help you search.

Debt consolidation loans. If the reason you were looking at a guarantor loan was to manage multiple debts, a debt consolidation loan could be worth exploring bringing multiple payments into one fixed monthly repayment that’s easier to plan around.

Consolidation doesn’t reduce the total amount you owe. Depending on the interest rate and term, consolidating could mean paying more in total than keeping your debts separate always compare the total amount repayable, not just the monthly payment. That said, for people juggling several creditors, the simplicity of a single payment can make a real practical difference.

Budgeting Loans and government support. If you’re receiving certain benefits, you may be eligible for a Budgeting Loan from the government → an interest-free loan repaid through small deductions from your benefits. Budgeting Loans are only available to people who have been receiving certain qualifying benefits for at least 26 weeks, and eligibility conditions apply. This is worth checking before taking out any commercial borrowing, as it could be a more affordable route for specific essential costs.

A sensible way to approach choosing

Step 1 Check your credit report. Get a copy so you know where you stand. You can access it free from Experian →, Equifax →, or TransUnion →.

Step 2 Use soft search tools. Look for lenders offering a soft eligibility check, so you can see your likelihood of approval without affecting your credit file.

Step 3 Compare the full cost. Look beyond the monthly payment the total amount repayable over the full term gives you the clearest picture.

Step 4 Read the terms carefully. Check for any charges, what happens if you miss a payment, and whether you can repay early if your circumstances improve.

Step 5 Seek free advice if unsure. MoneyHelper → (0800 138 7777) offers free, impartial guidance.

5. Will Your Credit History Be a Problem?

This is one of the most common concerns for people who previously relied on guarantor loans and it’s completely understandable. If you’ve had missed payments in the past, or your credit history is thinner than you’d like, it can feel as though mainstream borrowing is out of reach.

The reality is more nuanced. Your credit history is just one part of how lenders assess an application. Your income, your current outgoings, how stable your employment is, and how your recent financial behaviour compares to your past all play a role. Someone with a patchy credit history a few years ago who has been managing their finances steadily since may find they’re in a stronger position than they expect. Lenders who use income and affordability-based assessments rather than relying on credit score alone may consider your full financial picture, which means a poor or thin credit file does not automatically prevent you from borrowing.

It’s also worth knowing your credit report may contain errors. Checking it regularly through the free services from the main credit reference agencies means you can spot anything that shouldn’t be there and have it corrected. Even small inaccuracies can affect the picture lenders see.

Millions of people in the UK have what’s considered a “thin” credit file meaning there simply isn’t enough information for lenders to go on. This is different from having a poor credit history, and there are steps that can help build a more complete record over time. Read our guide to rebuilding your credit score in the UK →.

6. What to Watch Out For When Exploring Alternatives

When a familiar route closes, it’s natural to feel some urgency particularly if you have pressing financial pressures. But it’s worth taking a breath before committing to anything, especially if you’re being approached by unfamiliar lenders or offers that seem unusually accessible. Loan sharks and fee-charging credit brokers tend to target people at exactly these moments, so knowing what responsible lending looks like matters.

• Make sure any lender you consider is authorised and regulated by the FCA. You can check this on the FCA Financial Services Register →.
• Be cautious of any offer that seems to guarantee approval without checks. Responsible lenders always assess affordability before agreeing to lend.
• Look at the total amount repayable not just the monthly payment. A lower monthly figure over a longer term can mean paying significantly more overall.
• Avoid any lender who pressures you to decide quickly. Taking time to think and compare is always the right approach.

If someone asks you to pay an upfront fee to access a loan, that’s a serious warning sign. Legitimate lenders don’t operate this way.

7. How Has the Regulatory Change Actually Helped Borrowers?

It might not feel like it if you’ve been left without a product you relied on but the FCA’s actions here were largely in response to real harm. A significant number of guarantors found themselves liable for debts they didn’t fully understand they were taking on. Some were family members parents, siblings who had signed paperwork without being given a proper explanation of what it meant in practice.

The tighter standards that have emerged are intended to make lending fairer and clearer for everyone involved. The shift towards income and affordability-based assessments, rather than simply requiring a named guarantor, may mean more people can access credit in a way that’s genuinely assessed against what they can afford rather than against what someone else is prepared to underwrite.

The FCA’s Consumer Duty, introduced in 2023, has further raised the bar: lenders must now demonstrate that their products and communications deliver good outcomes for customers, including those in vulnerable circumstances. For borrowers, this means greater protection, clearer terms, and stronger recourse when things go wrong.

That’s a slower and sometimes less convenient process. But for many borrowers, it’s a more sustainable one.

Could an Oakbrook Loans Personal Loan Be Worth Exploring?

If you’re looking for a straightforward personal loan in your own name without needing a guarantor Oakbrook Loans offers unsecured personal loans assessed on your individual affordability. Our soft search eligibility check lets you see whether you’re likely to be approved before you formally apply, with no impact on your credit file.

Before applying, please make sure you’re confident any borrowing is affordable for you. Free, impartial guidance is available from MoneyHelper →. If you’re managing existing debt difficulty, StepChange → (0800 138 1111) can help you look at all your options first.

Check your eligibility with Oakbrook Loans → and see where you stand a soft search, with no impact on your credit file.

Representative example: Borrowing £10,000 over 48 months at Representative 24.9% APR and interest rate 24.9% p.a. (fixed) with monthly repayments of £317.64 and a total amount payable of £15,246.76. Rates from 19.9% APR to 34.9% APR. Loan terms from 12 to 60 months.

Final Thoughts

The changes in the guarantor loan market have undoubtedly created uncertainty for people who depended on that route and it’s completely reasonable to feel a bit lost about what to do next. But this moment could also be an opportunity to look at the broader picture of your borrowing, understand what’s changed in the wider market, and find an approach that fits where you are now, not where you were a few years ago.

Taking things one step at a time checking your credit report, understanding your options, and getting free advice if you need it puts you back in the driving seat. The right kind of borrowing should work around your life, not the other way around.

Need free money guidance or debt advice?

If you’re unsure whether taking on credit is right for your situation:

• MoneyHelper: 0800 138 7777
• StepChange: 0800 138 1111
• National Debtline: 0808 808 4000
• Citizens Advice:

This content is for information purposes only and should not be taken as financial advice. Always consider your own circumstances or seek independent guidance if you are unsure. Information on the guarantor loan market is correct as at [publish date]; the market position may change check fca.org.uk for the latest.

Oakbrook Loans is a trading name of Oakbrook Finance Limited, which is authorised and regulated by the Financial Conduct Authority (FRN: 723558).

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