Amigo Loans was one of the UK's most well-known guarantor lenders. It stopped lending to new customers after a court-approved scheme to compensate borrowers who were sold loans they could not afford. If you were looking at Amigo, or if you previously borrowed with them, this article sets out the main alternatives worth considering.
This article provides general information only. It is not financial advice and does not take into account your personal circumstances. Before borrowing, it can help to compare several options and consider how repayments would fit into your budget.
What happened to Amigo Loans?
In plain English, Amigo ran into serious problems with affordability complaints. The Financial Conduct Authority (FCA) had concerns that the company had not always checked carefully enough whether borrowers and guarantors could genuinely afford the loans they were given.
A court-approved redress scheme was put in place to pay compensation to affected customers. As a result of this process, Amigo stopped offering new loans.
The important bit is this: Amigo's absence does not mean guarantor loans have disappeared. Other FCA-regulated lenders still operate in this space, and there are also non-guarantor alternatives worth knowing about.
Always check that any lender you consider is authorised and regulated by the FCA. You can do this through the FCA's Financial Services Register at fca.org.uk.
When a guarantor loan can help
A guarantor loan may be worth considering if:
- Your credit history is limited or includes past missed payments, and mainstream lenders have declined you.
- You have someone in your life, such as a parent or close friend, who is willing to act as your guarantor and understands what that commitment means.
- You need a lump sum rather than a small credit limit.
- You are confident you can meet the repayments without relying on your guarantor to step in.
The presence of a guarantor reduces the lender's risk, which is why lenders can offer these loans to people who might not qualify for a standard personal loan. However, that does not make the loan low-risk for you or your guarantor.
When a guarantor loan can make things worse
There are real downsides to weigh before taking this route.
It puts a relationship at risk. If you miss payments, your guarantor is legally obliged to cover them. That can create tension or damage trust between close friends or family members.
Interest rates are typically high. Guarantor loans are aimed at people with limited options, and lenders price that risk accordingly. The representative APR on these products is often well above that of a standard personal loan. Borrowing a large amount over several years can result in a high total repayable figure.
Your guarantor takes on real financial responsibility. Before agreeing, a guarantor should understand that they will be chased for repayments if you fall behind. Their own credit file can be affected too.
Credit building is not certain. Making payments on time may help your credit profile over time, but this is not something any lender can promise, and the effect will depend on your wider credit history.
What to check before applying
A useful first step is to use a soft-search eligibility checker if the lender offers one. This shows you how likely you are to be accepted without leaving a mark on your credit file.
It can also help to:
- Read the full loan terms, including the total amount repayable, not just the monthly payment.
- Make sure your guarantor has read and understood the agreement, not just agreed in principle.
- Check the lender is on the FCA register before providing any personal information.
- Consider whether a smaller or shorter loan would reduce the overall interest you pay.
What are the main alternatives to Amigo Loans?
The options below are not ranked, and none of them suit every situation. They are worth knowing about so you can make a more informed decision.
Other FCA-regulated guarantor lenders
Several lenders still offer guarantor loans in the UK. The structure is similar to what Amigo offered: a co-signer takes responsibility if you cannot pay. Because this market changes, checking the FCA register and comparison sites for current providers is a more reliable approach than any fixed list in a published article.
Credit unions
Credit unions are member-owned, not-for-profit organisations that offer savings and loans. They are regulated by the FCA and the Prudential Regulation Authority (PRA). By law, the maximum interest rate a credit union can charge is capped, which makes them notably different from commercial lenders operating in the bad-credit market.
A simple way to think about it: a credit union is a bit like a local financial cooperative. You need to qualify for membership, usually based on where you live, where you work, or a community connection. Many credit unions will consider your whole situation, not just your credit score.
To find your nearest credit union, MoneyHelper (moneyhelper.org.uk) has a credit union locator tool.
See also: Credit unions guide
Credit builder credit cards
If you do not need a lump sum immediately and your main goal is to improve your credit profile, a credit builder card can be useful. These are credit cards designed for people with limited or damaged credit histories. They typically come with a low credit limit and a higher interest rate than standard cards.
The key is to clear the full balance each month. That way you avoid paying interest and build a positive record of on-time payments.
This option is not suitable if you need to borrow a meaningful sum right away. It works better as a long-term step to widen your borrowing options in the future.
Secured loans (homeowner loans)
If you own a property, a secured loan uses your home as collateral. Because the lender has security, people with a lower credit score can sometimes access larger sums at lower rates than unsecured options.
The critical point here: if you fall behind on a secured loan, the lender may be able to take steps to repossess your home. This makes secured loans a much higher-stakes decision than a guarantor loan. They are not a casual alternative.
If this is a route you are considering, our secured loans guide covers the key points in more detail.
Borrowing from family or friends (with a written agreement)
If someone in your life is willing to lend you money directly, a formal written agreement can protect both parties. This sets out the amount, any interest agreed, and a repayment schedule. MoneyHelper has guidance on how to structure a family loan agreement sensibly.
This avoids a lender altogether, so there are no credit checks and no interest charged if the family member agrees to lend interest-free. The downside is obvious: money and personal relationships do not always mix well, and a missed payment can do real damage.
Personal loans for bad credit
Some mainstream lenders and specialist lenders offer personal loans to people with a less-than-perfect credit history, sometimes without requiring a guarantor. Interest rates will be higher than for someone with a strong credit profile, but you avoid involving a third party.
A soft-search eligibility check, available through many lenders and comparison tools, lets you see likely options without affecting your credit file.
See also: Bad credit loans guide
Risks and things to check across all these options
Whatever route you choose, a few principles apply:
- Check the FCA register. Only borrow from firms that are authorised. Unlicensed lenders operate illegally and have no obligation to treat you fairly.
- Calculate the total cost. Look at the total amount repayable over the full term, not just the monthly figure.
- Affordability matters. A useful question to ask yourself is whether you could still make repayments if your income dropped or your outgoings rose. Lenders are required to carry out affordability checks, but the responsibility sits with you too.
- Avoid repeated short-term borrowing. Taking out one loan to pay off another can create a cycle that is difficult to break.
If you are in a position where debt is already feeling difficult to manage, free confidential help is available. MoneyHelper (0800 138 7777, moneyhelper.org.uk) can point you in the right direction.
Frequently asked questions
Is Amigo Loans still operating?
Amigo Loans stopped lending to new customers. The company went through a court-approved redress scheme for customers who were mis-sold loans. It is not currently accepting new applications. Check the FCA register to confirm a lender's authorisation status before applying.
What is a guarantor loan?
A guarantor loan is a type of unsecured loan where a second person, the guarantor, agrees to cover repayments if the borrower cannot. Lenders offer this to people with a thin or poor credit history because the guarantor reduces the lender's risk.
Will applying for a guarantor loan affect my credit score?
Most lenders run a soft search first, which does not affect your credit score. A full application usually involves a hard search, which does leave a mark. Checking whether a lender uses a soft-search eligibility check before a full application can help you avoid unnecessary footprints on your file.
Can a credit union lend to people with bad credit?
Many credit unions consider your wider financial situation, not just your credit score. They are not-for-profit, regulated by the FCA and the Prudential Regulation Authority, and interest rates are capped by law. Membership criteria vary, so it is worth checking your local credit union.
What happens to my guarantor if I miss a payment?
If you miss a payment and it is not recovered from you, the lender will ask your guarantor to make it instead. Missed payments can affect both your credit file and your guarantor's, and may damage the personal relationship. This is worth discussing honestly before asking someone to act as your guarantor.
Is a credit builder card a realistic alternative to a guarantor loan?
A credit builder card can be useful if you need to improve your credit profile over time rather than borrow a lump sum immediately. Credit limits are usually low, and interest rates are high, so clearing the balance each month keeps costs down and builds a positive payment record.
Sources and further reading
- Financial Conduct Authority (FCA): fca.org.uk, FCA Financial Services Register, authorisation and consumer information
- MoneyHelper: moneyhelper.org.uk, credit union locator, debt help, family loan guidance
Related guides
- Is Amigo Loans still operating?
Amigo Loans stopped lending to new customers. The company went through a court-approved redress scheme for customers who were mis-sold loans. It is not currently accepting new applications. Check the FCA register to confirm a lender's authorisation status before applying.
- What is a guarantor loan?
A guarantor loan is a type of unsecured loan where a second person, the guarantor, agrees to cover repayments if the borrower cannot. Lenders offer this to people with a thin or poor credit history because the guarantor reduces the lender's risk.
- Will applying for a guarantor loan affect my credit score?
Most lenders run a soft search first, which does not affect your credit score. A full application usually involves a hard search, which does leave a mark. Checking whether a lender uses a soft search eligibility check before a full application can help you avoid unnecessary footprints.
- Can a credit union lend to people with bad credit?
Many credit unions consider your wider financial situation, not just your credit score. They are not-for-profit, regulated by the FCA and the Prudential Regulation Authority, and interest rates are capped by law. Membership criteria vary, so it is worth checking your local credit union.
- What happens to my guarantor if I miss a payment?
If you miss a payment and it is not recovered from you, the lender will ask your guarantor to make it instead. Missed payments can affect both your credit file and your guarantor's, and may damage the personal relationship. This is worth discussing honestly before asking someone to act as your guarantor.
- Is a credit builder card a realistic alternative to a guarantor loan?
A credit builder card can be useful if you need to improve your credit profile over time rather than borrow a lump sum immediately. Credit limits are usually low, and interest rates are high, so clearing the balance each month keeps costs down and builds a positive payment record.