By EasyHow

How to avoid liability of the guarantor

The guarantor of the loan carries the same liability to the Bank as borrower. If the borrower cannot repay the loan, the obligations of the payment are passed on to the guarantor. Guarantors may be few, they are equally responsible to the Bank, unless otherwise stipulated by surety agreement.

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You will need

- analysis of all the risks to which you will go, becoming a guarantor.

Instruction

Collect information on the creditworthiness credit of the person for whom you will vouch for. Consider such traits as discipline, commitment and thoroughness. Check to see if he would take credits and how to return them. Ask whether he needs the loan and how he plans to use it. If at this stage you have any doubts, immediately discard the surety.

Determine whether you will be able, if necessary, to pay the loan for the borrower. If such payments are excessive or you are bonded, reject a request of sponsorship.

Think about if you will need in the near future to take out a Bank loan. The Bank when considering granting you a loan will take into account the fact that you are a guarantor, and with high probability will refuse. Directly and clearly explain to the borrower the reason for the refusal of bail. Do not think that you can spoil friendly relations with him.

Discard the loan payments under the guarantee agreement if the Bank has not informed you about significant changes in the contract, which have for you an increase in responsibility or other adverse consequences. In this case, the Bank was supposed to bring with you written consent to such changes.

Note

Do not try to escape from paying of the loan with the help of this method, such as avoidance of contact with Bank employees. To solve the problem this way you will fail you will only delay and worsen.

Useful advice

If you still had to fulfil its obligations under the guarantee, will get the Bank documents, which certify the requirements of the Bank to the borrower. From this moment on you are a creditor of the borrower and may demand from him not only the return of the amounts you paid, but interest payments as well as reimbursement of other losses incurred by you in connection with the liability to the Bank.