Taking a loan is a common issue in emergencies but being a guarantor for someone is surely an invitation to all sorts of trouble. Further, the borrower (loan guarantor banne ke nuksan) for whom you are becoming a loan guarantor defaults on that loan, then the guarantor may have to pay the total amount of loan. There are also many rules to avoid doing that, by knowing which you can avoid big trouble, let’s know about these rules.
This is the hard work of people that fulfills their dream for getting a house and a vehicle; they also take loans. Most often, people return their loans in time, but few do not pay off dues because of some sort of reason or purposely. To avoid this from happening, banks ask clients to bring a guarantor for the loan. That is, while giving a loan, in many circumstances, the bank makes a person other than the loan holder as the guarantor of the loan. If a borrower takes a loan and is unable to repay within the specified time, the bank recovers the total amount from the guarantor.
And affects the CIBIL score as well-
All the other effects can be faced by a borrower on default of loan, but the worst of all is the bankrupt in their CIBIL score. Taking a secured loan and not repaying it will lead to the banks confiscating the retained security of collateral as for the loan. Hence you may face problems during the time you seek another loan in the future.
The guarantor may have to repay all the money,
When the borrower fails to repay the loan amount, the bank sends notice to him initially and reminds to pay the outstanding amount. If the borrower still fails to pay, then bank sends notice to his guarantor. Along with that, at the time of availing the loan, it is made into agreement with the guarantor saying that he will repay the borrower money taken by him in the case of loan default. Thus, if a borrower does not make his payment, then the guarantor is also bound to make the payment.
Before becoming a guarantor, make sure that
Check if you are personally well acquainted with the person. Appraise his financial condition if he has defaulted on a loan or two in the past. Also ensure he avails of loan insurance cover; just in case something happens to him, you will not have a headache as well. This will safeguard both of you.
