Weighing Up Whether Being a Guarantor is The Right Role For You
So, you’ve got a request to be a guarantor on someone’s loan, but you’re worried about what this means. You may have never heard of guarantor loans before, or just don’t know the ins and out of these. If you don’t already know, a guarantor is someone who vouches for someone else’s ability to pay a loan, offering their own funds as a last resort if payments aren’t made by the borrower.
We’ve come up with this guide to help you to decide whether or not you should vouch for someone else, so you can have the facts behind you first.
Think about your funds
A major fear with being a guarantor is how it will affect your funds personally, and whether or not you’ll end up paying off someone else’s loan for them. Admittedly, there are some risks involved in being a guarantor, but these are generally minimized by the loan company, with numerous checks being carried out prior to lending.
Any reputable company checks the financial status of the borrower before the loan can be approved, to make sure that they can make the payments without additional assistance. This means it’s unlikely that you’ll be paying anything. That’s definitely a load off your mind.
Ask yourself some questions
Do I trust the person I’m signing for? Have they had trouble making repayments in the past? Ensure that you know the person you are signing for well, in order to minimize the possible risks of this venture. If the money won’t come between you and you know they will pay, then go ahead and sign.
Worried about the risks?
Even if you think you know and trust someone well, there still might be that niggling feeling that they’re going to do something underhand that you potentially won’t notice. You might be worried that they’ll lie about how much they’re borrowing, or about the payments involved.
Been asked to be a guarantor? Here’s what you need to know
However, this shouldn’t be a worry, as any good loan company will tell you in the contract exactly how much is being borrowed, and how it is being paid. Some companies will even transfer the money to you initially, so you are fully aware of the amounts involved.
Hopefully this guide has informed your decision, so you’ll be able to get back to the borrower with a full knowledge of what you’re doing.
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Category: Loans
