Year: 2020

Being a Guarantor – Who Can Be One and What It Means

Within the last decade, guarantor loans have become popular, even more so than before. It’s all down to how convenient these loans are and they do provide a viable borrowing option. These loans are widely used for those with poor credit and those with very little credit history. Being a guarantor isn’t without risks, however, and if you’re thinking of becoming a guarantor, you need to know the basics. So, what does it mean to be a guarantor and who’ll be eligible to be one?

The Role of a Guarantor

Guarantors assure a bank or lending institute the person actually borrowing the money will repay the loan. You act as a guarantor and you are, essentially, ‘guaranteeing’ the money will be repaid. If the borrowing fails to repay the loan, the burden falls on you the guarantor. So, in simple terms, if the loan has defaulted, the lender will look to the guarantor to repay it. It’s a big ask and you have to understand the risks if your friend or family member defaults. You have to be certain of this responsibility before being a guarantor. Loans with a guarantor can be ideal for borrowers but a major risk for guarantors.

Who Can Act as a Guarantor?

Guarantors must be over the age of twenty-one and have financial security or at least a steady paying job with a fairly good credit history. You can become a guarantor for almost anyone you know or trust; it can be a friend, family member, or work colleague. However, it’s a risk, no matter your age or history with the borrower. Your friend might have every intention of repaying the loan but after a few months and their circumstances change, it might be a very different story. Of course, guarantor loans may help establish someone’s credit and if you trust them, things should run smoothly. For more information, visit:

Are Loans With a Guarantor Safe For Guarantors Or Borrowers?

This goes back to how trustworthy your friends or family are. For instance, is your friend likely to skip out on the loan? Sometimes, circumstances beyond their control force them into a very difficult financial situation so you have to think. In terms of how safe guarantor loans are, you have to ensure they’re the best possible option available. You need to choose a reputable lender and one that offers a fair rate of interest and a reasonable monthly (or weekly) payment amount. You too need to do your research before you commit to any loan.

The Burden Falls To You

If you have trustworthy friends or family, being a guarantor can be a wonderful thing. You can help someone out in a tight financial spot and may even give their credit a little boost in the process. Of course, that doesn’t mean to say guarantors have an easy time of it as they carry a lot of responsibility on their shoulders. Anything could go wrong and the cost of the loan falls onto you. Loans with a guarantor can be useful as long as you understand your role as a guarantor and responsibilities. To know more click here.

How a guarantor makes the whole difference when getting a loan

The loans with a guarantor are loans with a guarantor, who is someone who is giving his or her assets as collateral for another person’s debt and is obligated to the creditor (bank) to pay for the other person’s debts in case of default. To be guarantor is to be tied to a third party debt until it is settled.The guarantor of a bank loan is the person who is responsible for the fulfillment of the contractual obligations if these are not fulfilled by the contractors, in other words, it is the person who is responsible for payment of the loan installments in case of default by the borrower. This is what makes bad credit guarantor loans.

Who can be guarantor in loans with a guarantor?

Any person can be guarantor in loans with a guarantor, provided that he has proven financial capacity to replace whoever contracts the loan. The criteria for accepting the guarantor vary between banks, and for example, the total value of the assets and, in other cases, the value of the remuneration may prevail.Click here.

What are the responsibilities of the guarantor?

The guarantor is obliged to answer (pay) to the creditor (bank) in case the debtor fails to pay or to delay in payment (default).

What are the biggest risks of being guarantor?

The guarantor does not become the owner of a good even if he has settled the debt related to it. If the good purchased was not sold to settle the debt, it remains the property of the former debtor.

What are the rights of the guarantor?

The guarantor who is called upon to respond to a breach of his assets is entitled to claim compensation from the debtor.

The guarantor has two protection mechanisms:

Out-of-court settlement procedure – Out-of-court settlement of non-compliance matters requires banks to negotiate debts with debtors before proceeding to court. The mechanism implies that the guarantors are informed of the debtor’s non-compliance by the creditor and that they may be covered by the procedure, integrating the negotiations and the “payment plan” of the outstanding installments.

When does the guarantor’s liability end?

The guarantor only ceases to be one when the debt of which he is guarantor is extinguished, and cannot, by his sole and exclusive decision, cease to be.

The guarantor may ask for the bail to be extinguished with the creditor, but this is not in their interest, since the guarantor is an additional security (and sometimes the only effective security) that he has.

When can you stop being a guarantor?

The guarantor cannot leave it by his own and unilateral decision, but can be replaced by another if the bank agrees to his replacement. The guarantor may also request a renegotiation of the guarantees given, and all parties (debtor, guarantor and creditor) must agree.

How to stop being a guarantor of a loan?

Settle the debt or negotiate – with the debtor and the creditor – the presentation of a new guarantor or new guarantees. It is very important to think before signing bad credit guarantor loans.