Loan Guarantor: If you become a guarantor for anyone, then be careful…or else you will have to bear heavy losses..

To take a loan from any bank, along with the documents, one necessary thing is a guarantor. If you also become a guarantor of a friend or relative without thinking, be careful. Because you may have to suffer a bad consequence of this.

Becoming a guarantor simply means that it is your responsibility to repay the loan taken. If the person who took the loan is not able to pay the installment on time. He is declared a defaulter; then, the guarantor also gets a notice.

These are the disadvantages.

It is the responsibility of the person who takes the loan to repay the loan installments from time to time. But, when he is not able to repay the loan, this default can affect your credit score. Therefore, before becoming a guarantor, it is very important to know the income of the other person. Because if your credit score gets spoiled due to that, then in the future, there may be a problem in taking a loan for yourself. Also, you may have to pay more interest on the loan.

Becoming a guarantor is not an easy decision, as the bank includes this loan in your total credit limit. If the borrower is declared bankrupt for some reason, even if he gets relief from repaying the loan, the guarantor has to pay the entire amount along with interest. Also, it is not easy to get free from the responsibility of the guarantor, unless the loan is fully repaid or the bank gives written permission.

There can be benefits too.
Still, there are some benefits of becoming a guarantor. With this, you can help a loved one. Apart from this, if the borrower is responsible and repays the loan on time, your credit score can improve. So, if you are considering becoming a guarantor, be careful, check your credit score regularly and take advice from a financial expert.

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