Becoming a guarantor should take alot of consideration as it can be at times risky. If a friend or family has come to you asking you to be a guarantor for them then it is good to understand the implications.
One of the most important things to remember is that your role as a guarantor means that if the guarantor lenders are finding it difficult to obtain the repayments from the borrower then they have the right to chase you for the payments that your friend or family member is not making. Guarantor lenders will try a number of times to get payment off the borrower before coming to you for payment as you are responsible for making payment if the borrower does not pay.
Before Becoming A Guarantor And Understanding The Risk
If you find that you as a guarantor start having financial difficulties yourself and can’t make the repayments on behalf of the borrower then this will affect your own credit history which will result in you struggling to get credit in the future.
Ask yourself some questions before agreeing to become a guarantor here’s a few risk assessment tips:
- When a borrower asks you to be their guarantor is it because they have bad credit and if so do you think they will struggle to make payment?
- Why does the borrower need to get a loan do they really need it and is their alternative way they can raise the money they need?
- Will the borrower use the funds responsibly and what it is meant for?
- Are you willing to repay the loan if the borrower can’t make payments?
- What risk are involved if I struggle to cover the payments for the borrower?
Being Comfortable Becoming A Guarantor
We at The Lenders List want make everyone understand the risks involved in any type of loan and we advised all borrowers and guarantors to read the terms and conditions on all lenders websites as they will vary from lender to lender DO NOT agree to anything if you are not comfortable with something or feel the risk is too much but if you are happy with all the conditions of the contracts from guarantor lenders and you feel at ease then proceed as you wish.