On behalf of the lending banks and NBSC (Non-Banking Finance Company) companies, many times the borrowers are demanded to bring a guarantor. Banks and companies do this only when they have any doubt about the ability of the borrower to repay. But you should pay special attention to some things while guaranteeing someone’s loan. Loan guarantee given to someone can have an impact on your credit score, job profile and also on your loan taking. Let us understand the risks that can affect you after guaranteeing the loan.
Risk of Liability: Banks always take loan only after assessing the borrower’s income, credit score, loan repayment capacity, his/her business or employer profile (government or private) and the ability of the person guarantor of the loan. gives. If the borrower is unable to repay the loan on time, then the loan guarantor will have to pay the loan in his place.
Credit Score: The guarantor is the same partner in the loan as the person taking the loan. If you have guaranteed the loan of a person and that person is not able to repay the loan on time, then your credit score may also be low. In such a situation, before guaranteeing the loan, you should gather a good information about the ability of that person to repay.
Reduces the chances of getting a loan in future: If you guarantee someone’s loan, then that loan is included in your liability on behalf of the banks. In such a situation, if you apply for a loan in any bank, you will be offered a lesser amount due to your liability.
Cannot back off loan guarantee: If you are becoming a guarantor in a loan, you cannot go back in the middle of the loan tenure. This can be done only in case the borrower brings a new guarantor and the bank agrees with him.