CITIZENS ADVICE warned yesterday that guarantor loans were potentially just as damaging as payday loans, burdening friends and relatives with “mountains of debt.”

The charity said those put forward as a guarantor on behalf of a borrower were unknowingly signing up to guarantee expensive loan repayments and being hounded in the event of default or arrears.

The charity’s report, A Problem Shared, said 43 per cent of guarantors who sought help were unsure of the extent of their liabilities.

Guarantors could still be liable to pay off a debt even if the borrower had died and that they were not regarded as “customers” by regulators, therefore missing out on basic protections.

Citizens Advice said the loans, which have average interest rates of 46.3 per cent, were often marketed at borrowers with poor credit histories.