Guarantors Responsibilities and Obligations

The Guarantor’s Responsibility
A guarantee is not just a formality to help someone obtain credit. It is a big responsibility that should not be entered into lightly. It means that you are prepared to pay for someone else’s debts if they don’t pay. If necessary, the lender will not even bother bringing action against the borrower, but will sue you for the guarantee if he/she feels that you are the one with the money.

Too many people believe that the friend or relative that you guarantee will never do anything to make the lender enforce the guarantee against you. The reality is that your friend or relative may suddenly find they cannot meet the repayments of the loan because of some situation (such as illness or unemployment etc.) and the onus will be on you to pay up. Be very clear on your obligations as a guarantor before you sign on the dotted line.

Guarantor’s Obligations
If the borrower defaults in payment to the lender the guarantor is liable to make good that default, which could include arrears of princi...

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