The guarantor is the person who is responsible to the bank for the proper performance of obligations under the loan of another person. Before agreeing to become a loan guarantor, it is worthwhile to analyze in detail all the risks.
It is necessary
- - loan agreement;
- - surety agreement.
Instructions
Step 1
The borrower's benefit from attracting guarantors is unambiguous. In such cases, banks are more willing to provide loans for large amounts, because another responsible party appears in the agreement. But the benefits of participating in a credit scheme for the guarantor are very ambiguous. After all, his responsibility to repay the loan is equivalent to that provided for the borrower. If, for any reason, he stops fulfilling his obligations, the bank will demand that payments be secured by the surety. At the same time, he can collect both the amount of the principal debt and interest, fines and penalties that are provided for by the loan agreement.
Step 2
The guarantor can familiarize himself with his rights and obligations in the surety agreement, which is signed simultaneously with the credit one. It is this document that should be carefully studied in order to protect yourself from unnecessary troubles. It will not be superfluous to check the documents and solvency of the borrower himself.
Step 3
Before agreeing to become a guarantor, study the loan agreement. Pay attention to such parameters as the amount, loan term, as well as the amount of monthly payments. Based on this, determine whether you can cope with the fulfillment of the designated financial obligations if the borrower suddenly stops paying the loan. Only after weighing all the arguments for and against, you agree to become a surety.
Step 4
The loan guarantor risks his property when applying for a loan, because he can be foreclosed when the bank goes to court. But this is only possible if the guarantor does not have enough money to pay off the debt.
Step 5
Please note that the presence of loan delinquencies, among other things, negatively affects the credit history of the guarantor. This can create certain difficulties when applying for a loan in the future. At the same time, even if the borrower fulfills his obligations in good faith, in the process of obtaining a loan for himself, the guarantor may encounter restrictions on the amount of the loan. After all, banks take into account the guarantee available to him when determining the potential amount of lending.
