Who can be a Guarantor and What Are Their Obligations?
People who are thinking of obtaining a guarantor loan must first find someone who will be willing to take on the responsibilities and the risks associated with becoming a guarantor. The person who is taking out a guarantor loan places a huge burden on the shoulders of a guarantor.
In the event they default on their payments and flee, the guarantor will become responsible for their actions and will have to repay their debt in full. If you are seriously thinking of taking this step, you need to select someone who you know trusts you not to default or flee.
Who Can Become Your Guarantor?
The following people can qualify as your guarantor, given they are 18 and older:
Some lenders give special preferences to guarantors who own their homes, as that cements their ability to pay the loan if you bail. They tend to give you a loan up to £7500 of the guarantor owns a home and up to £5000 if the guarantor stays in a rented home.
Before you ask anyone to become your guarantor, you need to inform them of their responsibilities and obligations so nothing is left hidden, but is all out in the open for them to make a well informed decision on whether they want to become your guarantor or not.
The Guarantor‘s Responsibilities
When someone agrees to financially support a relative or friend in need, it is considered a thoughtful act. By agreeing to become a guarantor, they are agreeing to repay the lender in the event you default on your repayments.
The lender will come after the guarantor to make them repay the entire amount owed in full. It is unlikely for the lender to take legal action, as most of time; the guarantor has the money to repay the lender. In the event they sue the guarantor, they can take legal action of their own by filing a lawsuit against you, the borrower.
The Guarantor’s Obligations
The guarantor is obligated to repay the loan repayments if the borrower defaults. They will have to repay the entire amount with interest.
Can the Guarantor Avoid Paying the Lender?
The guarantor can make the claim of not understanding the terms of the agreement, but success in winning the case in court is unlikely. Since the guarantor has signed an agreement, they will have no choice, but to repay the lender.
What Can the Guarantor Do?
Guarantors should consult with their lawyers about the terms and conditions of the agreement and on whether they should go forward with becoming a guarantor for their friend or family member.
Both the borrower and the guarantor should have a mutual understanding based on trust. If their trust between both parties and the guarantor knows the borrower will not break their trust, they should have no qualms of signing the contract to become their guarantor.