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Published on Jan 27, 2021Updated on Aug 8, 2022
A person generally takes a personal loan at times of financial need or to meet some large and important expenses. A personal loan is easy to obtain and convenient to use but involves giving a repayment guarantee. Sometimes, if an applicant doesn’t meet all the criteria like a credit score above 750, financial Institutions while disbursing the loan may ask to get a Personal Loan Guarantor.
A Personal Loan Guarantor is a person who will sign your loan agreement with you and stand as a guarantor of your repayment of the loan. This person may be a family member, close friend or well-trusted colleague. It's quite a big responsibility to be a personal loan guarantor as by accepting this role you are accepting that if the primary borrower defaults or is unable to repay the loan, then you will repay it in such a case.
If you have been asked to be a Personal Loan Guarantor – then there are some things you should know before you agree.
The Personal Loan guarantor is the person who acknowledges that if the borrower defaults then he will pay his debt. There are other effects as well of signing on as a personal Loan guarantor. If the loan is being repaid on time and in full, then there are no ill effects of being a guarantor and in fact, it helps the guarantor by improving CIBIL score as well but it is the situation in which the primary borrower cannot or is not paying that the guarantor faces the following trouble:
Must Read: 5 Reasons Why You Should Get a Personal Loan
If you have decided to help out your family or friend and be their personal loan guarantor – you can safeguard yourself at least to an extent by following a few tips.
Must Read: Different Types of Personal Loans in India
When one will apply online for a personal loan such details will be given which will specify whether or not you are required to get a personal loan guarantor or not.
The financial institutions ask for a Personal Loan Guarantor if:
You should definitely think a million times before becoming the guarantor for someone and even then take on such a role only for the nearest and dearest of all.
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