The early morning, Daksh got a call from the bank manager. He was summoned to present himself in the bank branch at 11 am. Driving his car to the bank office, Daksh was thinking about the reason. He was not having any relationship with that bank. His curiosity was at the peak point when he entered the cabin. He had a detailed conversation with the bank manager and it was a shock for him. He was liable to repay the loan amount of Rs. 2 lakhs that his friend has taken 2 years ago. After paying 24 EMIs, his friend, Rajeev was not able to pay further EMIs because of some money crises. And because of being a guarantor for his personal loan, Daksh was asked to pay further EMIs.


This can be your situation also. If you have signed yourself as a co-applicant or going to be a guarantor of a loan, then think again. Being a co-applicant is a huge responsibility. It is not like you are helping someone to get a loan. It is a surety that in case if the applicant is unable to repay, you will repay the loan amount. Here are some points that you must consider before signing as a guarantor:

Don’t show blind trust: If a friend of yours or your close relative wants to sign you as a co-applicant in his/her loan, then don’t get emotional. After all, it’s your financial health. Don’t trust anybody about his or her repaying capacity. Consider the borrower’s financial history and credit score. If you know that person for a long time and trust his/her financial character, only then go for it.

Being a Guarantor affects your Credit Score: If you are a co-applicant in any loan, your CIBIL score will get affected. If the borrower is doing any default in the loan in which you are the co-applicant, you will also feel the heat. Your CIBIL score will get hit by the defaults of the borrower.

Read the fine print: When you are going to sign in the loan application as a guarantor, do not miss the terms and conditions. Always read carefully what is written in the very fine print

Opting out will be difficult: It is difficult to opt out as a guarantor of the loan or to get relief. If you have signed in as a co-applicant and after some time you want to move out, you have to work hard for that. You may need to submit an application in the bank or may have to take some legal action. Consult your banker if you want to opt out as a guarantor.

Being a guarantor is not an easy thing. It may be good as it builds your credit history or may be bad as it can spoil it also. It may be difficult to say no to the people whom you love or care, but you must consider the above-mentioned points. Your financial health is in your hands. Do not ruin it by blowing into emotions.

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