Following the legal loan, procedures become a secondary thing, as before applying for any loan the first thing that comes to our mind is of having a loan guarantor who can make a strong commitment of not leaving you to fight the lone battle of paying up their dues in case of repayment failure.
The moment you become confident about this fact, then the next step you have to follow is of opting to become a guarantor. But wait for a second, you can only perform this duty before you completely read and agree to the terms and conditions of the agreement asked by the bank.
What happens when becoming their loan guarantor you approached by a close friend? Would you say yes without question or would you analyze your decision before the situation objective? When in the money matters objectivity is critical, so you opt for the latter in our advice. Why you should think twice ! and Read on to know more about being a loan guarantor.
When you become eligible for becoming a loan guarantor for any person’s loan it automatically makes you liable for the repayment to become responsible for another individual’s debt in case he fails to repay because the moment you become a loan guarantor you are equally responsible for paying off the loan!
When you give a guarantee for another individual’s balance due, it certainly comes with many risks! While taking this decision, the chief deciding factor will be to measure the borrower’s financial ability to pay off the loan.
You also need to assess the objectively whether the borrower can admire his claimed promise and not leave you to fight the battle of paying up their financial dues in default cases.
The second you turn into sure on both these counts, then you can choose to turn out to be a guarantor but not before you totally read and agree to the terms and conditions put by the bank in their contract.
While the requirement of a good credit record along with the past repayment track record of preceding loans, credit card payments, etc certainly becomes the key factor for a bank to inquire for a loan guarantor, this might not always be the case.
The next thing to be kept in mind is that if I decide to become a loan guarantor and the borrower is unable to reimburse, then what happens?
When you put your sign on the dotted line and give consent to become a guarantor, you are formally bound to pay off the amount outstanding if the borrower fails to pay. If the borrower falls in the non-payment defaulters list, then the bank will surely start approaching you for clearing the debts and the situation can get worse when they seal all your bank accounts, legally takeover your personal property and in the end declares you as bankrupt.
So before taking such a decision, you should be crystal clear about the terms and conditions. Also, you need to make sure there are sufficient safety clauses in place that make sure that you are confined to some extent against the legal eventualities.
Plus, you should also be confident about, the fact that you are not held legally responsible if the original loan conformity is changed at a future point in time without your consciousness.