Amigo customers include those who lack credit history, such as young people and people who are new to the UK. Or, it may be people who simply have an impaired credit history. What brings all of Amigo’s customers together though is that they have a friend or family member willing to act as a guarantor.
Guarantors tend to be family members and friends. Amigo places great emphasis on clear and transparent communication during the application process, and aims to ensure that there is no misunderstanding of the terms and conditions of its product on the part of either the borrower or guarantor.
Amigo goes to great lengths to ensure guarantors are fully aware of their commitment. Amigo’s loan products are appealing to borrowers because it is simple, transparent and straightforward. Amigo also carries out a telephone interview with every guarantor where it lays out their obligations and ensures there is no ambiguity as to the terms of the product.
The process involves detailed affordability checks on both the borrower and the guarantor, and Amigo asks them to provide their debit card details and a direct debit to use if required.
Finally the loan is paid out into the guarantor's bank account rather than the borrower's to reinforce the guarantor's awareness of their role and associated obligations.
No one should be a guarantor unless they are happy to pay the loan if the borrower doesn't. But occasionally this does happen - when a payment is missed Amigo contacts the borrower and the guarantor by phone, email and text message so Amigo can sort it out as quickly as possible and understand what’s caused the missed payment.
If a borrower finds themselves unable to pay, Amigo will talk to the borrower about why this is happening and, if appropriate, give them some time to sort things out. If after some time the borrower is still unable to pay Amigo will seek payment from the guarantor.
In some situations a borrower is given more time before the guarantor is asked to make the payment. Amigo will also cap the interest and arrange a payment plan with either the borrower or both the borrower and the guarantor. The guarantor is always kept informed so they know what's going on.
Amigo also makes its 10 promises to everyone.
Amigo will look at the guarantor's credit file as part of its checks before paying out the loan to make sure that they are financially stable and haven't had trouble paying back their bills in the past. Acting as a guarantor generally does not affect the guarantor’s credit score. However, in the event that a recovery reaches a court process where the court grants a judgement against the guarantor, the court may reflect this in the guarantor’s credit file.
Customers only pay interest for the time they have the loan.
For example, if a customer borrowed £3000 over 36 months but decided to repay the loan in 12 months, they would only pay interest for those 12 months.
There are not early repayment fees or charges for making extra payments, and an option for early repayment with no penalty.
An Amigo loan provides an opportunity to improve a person's credit score at a more accessible rate where the previous alternatives would have been either highly expensive or unattainable. A guarantor facilitates improved access to credit for borrowers with a 'poor' or 'no' credit history. There is a greater probability the borrower will develop prudent financial habits when there is a guarantor to provide 'oversight'.
Guarantors may be able to lend the borrower the money themselves. However, not all guarantors will have the funds available to do so. More importantly however, Amigo’s guarantors support borrowers to rebuild or build their credit file through an Amigo loan. Other guarantors may chose to borrow from a lower cost mainstream lender on behalf of the borrower. However, this doesn’t allow the borrower to improve their own credit score, and some people do not want the administration of applying for a loan and managing the monthly repayments, nor do they wish for their own credit file to be impacted. An Amigo loan solves these issues.
Amigo believes its APR is fair and reasonable for the product and service it offers. Its APR is in line with credit unions, and with mainstream credit there are customers who pay similar or higher APRs than we charge.
The guarantor loan offers a relatively longer-term, unsecured loan at the cost of a more mainstream loan product and its APR is significantly lower than that of other non-standard businesses.