Every financial institution or bank asks for a guarantor while borrowing a personal loan. A personal loan guarantor is the individual who is solely responsible for paying the debts of the borrower in case he/she is unable to make payments as debts with interest rates. This person is like a financial backup on behalf of the borrower. It ensures the loan company that the repayment will be made on time.
A guarantor may be anybody close to the borrower of the personal loan like his dearest friend, a close relationship who has faith in him and is ready to pay the outstanding amount if the borrower fails to do so. Some banks ask to visit the guarantor once in the bank to verify his/her details. It takes approval on behalf of the individual taking a loan.
Personal Loan Guarantor is Co-Signer for the Lender
While borrowing a personal loan, it becomes very necessary that you understand the primary roles and responsibilities of the Personal Loan guarantor. There are many instances when a personal loan guarantor acts as a co-signer. It is represented as a co-borrower of the personal loan. The person who is the guarantor can also pay the debts on behalf of the borrower, but there are many dissimilarities between both of them. Some of them are:
A personal loan guarantor can’t claim the loan amount if he is unable to pay debts.
Guarantor won’t get any benefit of the loan like low interest rates, and best banking deals and offers. Choose your preferred guarantor with your personal loan in Delhi, Mumbai, Lucknow Goa or anywhere you have stayed.
Responsibilities of Personal Loan Guarantor
- It becomes very necessary to know the roles and responsibilities of the guarantor before signing the documents for the personal loan.
- If you are becoming a guarantor, then you should know the personnel on your behalf you will be liable to pay charges and pay the debts needed.
- In case the borrower fails to pay the loans, the guarantor is asked to pay in lieu of his friend or dearest member whatever relation is with the borrower.
- If you take the guarantee of being a loan defaulter, your credit or CIBIL will also be affected.
Agreement That You Are Not the Borrower of the Loan
The agreement is needed from the guarantor side explaining that he/she is not the borrower of the loan. This agreement safeguards the loan holder from any type of liability arising from all your actions. It prevents any question on the part of the lender to know who is responsible for any type of debt or default on your and your family’s part. You can get a personal loan guarantor in the form of your relative or close friend anywhere in your city. For example: Guarantor for personal loans in Delhi.
Reviewing the Loan Term Very Carefully
At the time of accepting the roles and responsibilities of a guarantor, it becomes very necessary to check and review the terms and conditions of the loan very carefully. Analyze the condition of the loan to protect yourself from financial stress. Ensure that you have completely read all the guidelines of the loan and agree to the terms. To better understand your rights and duties as a guarantor, you can easily take the consultation of a loan expert or banking official.
Benefits of Becoming a Personal Loan Guarantor
Save money
One of the major advantages of being a guarantor is to decrease the rate of interest on your loan amount. Generally, a guarantor holds a very excellent credit score with a good credit and financial history. Thus, banks and financial institutions provide loans very easily to the individual if he/she appoints a guarantor on their behalf. So, minimized interest rates help the person to save lots of money. A guarantor can easily negotiate personal loan interest rates with the banking institution.
Lender/ Bank Always Consider Credit History Before Approval
The first criterion for taking a personal loan is having a good credit history. So, banks and lenders always consider a credit score or CIBIL before approving your loan. With a guarantor, you can easily take loans even if you have low credit score. O, make sure to analyze and access credit history and score in advance with your guarantor.
Summary
Personal loans are one of the best options to choose from while requiring a lump sum amount for medical emergencies, weddings, instant trips to a foreign country, or any immediate financial assistance. Every lender or banking institution approves loans with a guarantor. He is responsible for paying the borrower’s outstanding amount in case he/she fails to do so. The guarantor holds a good credit history, so banks provide personal loans very easily.
