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Should You Sign in as a Guarantor for a Loan on Behalf of any Friend or Family?

បានប្រកាសនៅ Business នៅSeptember 27 2021 at 06:29 PM

When a person takes an unsecured personal loan, no collateral is in question. In such a situation, a Guarantor takes the responsibility on his shoulders in case of non-repayment. If the borrower defaults on the payments, a guarantor can also be held liable. Given this risk, a lot should be considered before becoming one.

 

Should you be a Guarantor?

Deciding whether to become a guarantor can be challenging. A lot must be thought about beforehand. Some points to consider are:

  1. The Loan Amount:

The first thing you should consider is the loan amount. In case of non-repayment, would your financial condition allow you to pay this amount? If your answer is no, then you should refrain from becoming a guarantor.

  1. A Failsafe Plan:

In the worst-case scenario, the entire payment would have to be done by you. In such a situation, it is smart to think about how you would go about it. You must consider various situations and aspects and plan accordingly.

  1. The Borrower’s Creditworthiness:

One of the most important questions to answer is this one. Irrespective of your closeness with the borrower, you must be satisfied with his ability to repay loans. If you aren’t, then you shouldn’t go ahead with it.

 

Essential Things To Keep In Mind

There is nothing wrong with being a Guarantor and helping a loved one out. At the same time, it is not wrong to think about yourself and exercise caution in the whole situation. Some points you should keep in mind are:

 

  1. Involve a Co-Guarantor:

It is always prudent to have more Guarantors with you if you are becoming one too. This would ease the pressure off of your shoulders, and the loan amount would be divided.

  1. Keep a Check on the Borrower:

Keep a close eye on the borrower's loan repayments. Make sure that they are up-to-date with their payments and are not lagging. This would help your financial stress in the future.

  1. Analyze the Documents:

If you are asked to be a Guarantor, make sure you go through all of the paperwork thoroughly and even seek financial advice if needed. It is okay to be skeptical about events that may lead to you exhausting what you've earned when it comes to money.

  1. Trust Your Instincts:

Never become a Guarantor of a person you cannot blindly trust. It is the paramount conversation that you should have with yourself. If it gets difficult making a decision, always think about the consequences and how your standard of living could drastically fall just by placing your trust in the wrong person.

 

Conclusion:

Becoming a Guarantor is not an easy decision to make. If you ever want to become a guarantor for personal loans, or even for an unsecured business loan in Delhi, Finway may be the best option for you to get a loan sanctioned. 

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