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Amigo loans: where friendships go to die?

Posted 03 November 2019

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Amigo is a lender that offers customers guarantor loans. These types of loans are a controversial way to borrow.

If you’re considering a guarantor loan, you need to know your stuff before signing on the dotted line.  You could be putting your friendships and even relationships with family members at risk.

If you’ve already got a loan with Amigo (or any company for that matter), our guide will point you in the right direction.


How do Amigo loans work?

You apply like you would any other loan, the difference being you propose a guarantor. This is someone - usually a friend or family member- who will make monthly payments to your loan if you aren’t able to pay yours.

This gives Amigo a back up plan if things go wrong and it’s why they are willing to lend to people with a poor credit rating.

Who can be a guarantor on a loan?

There aren’t too many restrictions to who can be a guarantor. The Amigo website stipulates three things:

  • • Aged 18-75
  • • UK homeowner or have a good credit history
  • • Happy to pay if you don’t


 How can a guarantor be impacted?

The guarantor is usually a parent or a friend (or in this case ‘amigo’) who makes the guarantee. But don’t expect them to be an ‘amigo’ for long if you miss your payments.

If you’re considering a guarantor loan, you need to know exactly what you’re asking your guarantor to guarantee. If you are unable to make your payments then your guarantor has to step in and make the repayments on your loan each month. If, for some reason, your guarantor is unwilling or unable to take on the payments at the time, then they may be impacted in the following ways:

  • •Damage to the guarantor’s credit file
  • •Legal action against them in order to recover the money


Both points are a cause for concern but the main worry is legal action. On the Amigo website they say the following:


Legal action is a last resort. However, it gives Amigo a back up plan to their back up plan. That’s why guarantors who are homeowners are looked at so favourably.

The key thing to take from this is that it's absolutely vital the guarantor knows they will be able to manage the monthly payments should they have to. And you need to be sure that your relationship with your guarantor is strong enough to survive them being asked to make your payments if you can’t (and vice versa).

Alternatives to Amigo Loans

There are all sorts of reasons people take out loans. If you’re thinking about a loan to consolidate your debts then there are other options available that you might not be aware of.

Some debt solutions can help you to consolidate your debts without putting your parents or friends home at risk. The payments you make are based on what you can afford.

by Christine Walsh

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