Things to Know Before Becoming a Personal Loan Guarantor

 

An individual with good friends and an impressive credit score may face a lot of requests for being a loan guarantor. A loan guarantor is a person that takes the guarantee of someone else’s loan when that individual is facing rejection. It is good to help someone have funds at the time of need, but you need to keep yourself alert about the possible drawbacks and risks associated with this. A loan guarantor doesn’t enjoy the fund but needs to take the responsibilities equally. So before you become a co-signer for an instant personal loan, you need to pay attention to these details.

 

• You are under debt: It is not you that borrows, but since you have been a guarantor for the loan, it gets added to your credit report. For the tenure the personal loan goes on, it is added to your report and you are not eligible for a further loan unless it is over. This decreases the chances of your borrowing when you need it for yourself. So, when you are closing your chances to borrow for someone else, you need to think twice.
• Your credit score is affected: Since the loan gets added to your credit report, your credit score is into play. If the loan is repaid on time, it helps your score positively, and if not, then the opposite happens. Your score will go down if the loan EMI is missed or not paid within the due date. You need to understand that the activities of another individual regarding his loan, will affect your credit background.
• Your savings are hurt: It hurts when your savings goes into paying someone else’s loan. This happens when the individual is not being able to pay, and you will be responsible. You are the guarantee for the loan repayment, so without any changes, you need to use your savings to pay the loan. This means, your hard-earned money is paid for someone else’s expenses. If you are being a guarantor, make sure it is worth taking such a huge responsibility.
• Your peace of mind is affected: A debt is a constant burden, and it is on you without any profit. The EMI dates, the fear of repayment failure, or bad credit scores can give you daunting nights.

 

Final words

A loan guarantor is a big decision, as it is filled with drawbacks from every corner. If you are helping someone get a personal loan in Bangalore, refer him to Clix Capital for a better experience.