If you fall behind with a guarantor loan or can’t afford to pay it, the lender will ask the guarantor to catch up with payments, or take the payment directly from their bank account using a Continuous Payment Authority (CPA) which is usually set up on approval of the loan.
If payments are not made to the account it will default and the lender can then ask the guarantor to make the repayments, or take the money from the guarantor's bank account.
The debt will be dealt with using the normal debt collection process which could involve the debt being passed to a collection agency or court action being taken.
The default will be recorded on the credit files for both the borrower and the loan guarantor.
This places a significant risk on the guarantor, as they’ve agreed to repay the debt if you can’t.
If a family member or friend is your guarantor, the impact of them having to pay the debt could cause relationship problems, stress and financial difficulties. If they’ve secured the loan against their home, it could be at risk of repossession.