Why most lenders do not ask for one
An ordinary personal or short-term loan is unsecured: nothing is pledged and nobody else signs. Instead the lender has to satisfy itself that you can afford the repayments. The National Credit Regulations tell it how: look at your gross and net income, your existing debt repayments and your living expenses, and verify your income from your latest three payslips or bank statements.
If that assessment shows you can carry the instalment, a guarantor adds little for the lender. If it shows you cannot, the law expects the lender to decline rather than lend on the strength of someone else's promise, because credit that the borrower clearly cannot afford can be set aside as reckless. That is why lenders such as those on our page about unsecured loans in South Africa say plainly that no collateral or guarantor is needed.
When a guarantor is asked for
The common cases are borrowers with no income of their own. A bank study loan for a full-time student usually needs a parent or guardian to stand surety, because the student will only earn after graduating. Credit to a small company or close corporation often comes with a personal surety from the owner. Some lenders also accept a co-applicant or surety for a larger amount than the borrower's income alone supports.
A request for a guarantor on a small personal or short-term loan, from a lender you found online, is unusual. Ask why, and check the lender's registration number on the National Credit Regulator's register before you go any further.
What standing surety means
A surety promises to pay the debt if the borrower does not. A contract of suretyship must be in writing and signed by the surety, and most bank forms make the surety liable as co-principal debtor, which lets the lender claim from the surety directly without first suing the borrower. Missed payments can then appear on the surety's credit record as well.
Before you sign for someone else, read the form: whether the suretyship is limited to one loan or covers all the borrower's debts with that lender, whether there is a maximum amount, and how it ends. A guarantor also has the right to settle the debt early, as the borrower does, which can stop further interest if the borrower stops paying.
Borrowing on your own
To be assessed on your own, make your income easy to verify: a salary or business income paid into one bank account, three months of statements ready, and existing debit orders you can explain. Paying off a small account or closing a store card you do not use can make room in the affordability calculation.
If no lender will lend to you without someone else's signature, take that as information. It usually means the instalment would take too large a share of your income, and borrowing less, or waiting, is safer than putting a relative's credit record on the line. Our guide on how lenders decide explains what they look at.
Red flags
No registered lender asks for a fee before paying out a loan, whether it is called a guarantor fee, an insurance fee or a release fee. The National Credit Regulator warns that upfront payments for a loan are unlawful. Nor may anyone keep your bank card, PIN or ID document as security. If you meet either, walk away and report it.