More than 50,000 people a year are taking out guarantor loans. These are aimed at people with a poor credit history, they can be repaid over periods as long as five years, and they carry high interest rates of up to 46 per cent per year.

Family members or friends act as a guarantee for this loan, if the borrower fails to pay off the debt. Guarantor loans can be damaging as they are not covered by the interest rate cap that was imposed on Payday loans in January this year.

Many Guarantors are unaware they are signing up for large debts and can be legitimately pursued by debt collectors, even in cases where the borrower has died.

Of the cases investigated by Citizens Advice, 43 per cent of guarantors were unsure of the extent of their responsibilities.

Citizens Advice wants the Financial Conduct Authority to make sure that guarantors and borrowers are given adequate information before signing up to such loans, and are calling for:

• Guarantors to be given a letter of agreement and a cooling off period

• Liability warnings to be added to marketing material, and

• Lenders to direct borrowers to free independent debt advice.

Free, confidential advice and help is available from South Lakes Citizens Advice Bureau on any aspect of debt, consumer problems, benefits, housing, employment and any other problems. We have various outlets across South Lakeland and can also give advice over the phone – telephone 015394 46464 for an appointment and help.