A friend needs a personal loan, but when he goes to the bank, to ask for the money, he is told that he needs a guarantee and oh surprise! He asks you to be the one who guarantees that loan of money he needs. What do you do? Will you say yes on the spot?
Stop there! Being such a good person can bring negative consequences to your economy . Learn more about being a loan guarantee before accepting.
What is a loan guarantee?
A guarantee is the person, sometimes it is the entity, which, voluntarily, is offered as a guarantee of the payment of the loan that is requested.
Now, if you remember what happens to the guarantees when the payments are not met, you will be able to know what will happen to you (or rather with your assets) if the debtor does not comply, right? Although, of course, this risk is only latent when it comes to solidarity guarantees.
What do I risk if I am a guarantee?
If your friend took out a large loan, like a mortgage loan , and you were his guarantee, but he stopped paying the debt, start worrying.
Why?. Because you not only compromise your current assets, if your friend does not pay, but also the futures. All in favor of paying the debt that you guaranteed and that is not being paid.
Yes or yes will they charge me the debt of the one I endorsed?
Not that they will charge you immediately. What will happen is that it will begin a tedious process through which it will seek to assess whether the debtor is unable to pay.
If in effect this does not have work, goods, or any type of income to be seized, the debt will pass to you. The worst is not that, and it is that you will not only pay the debt, but the additional interest for late payments and the expenses of the process.
How can I protect myself and be a loan guarantee?
Well, leaving your conditions in writing. When you agree to be the guarantor of a loan, ask that a debt ceiling be established. It also asks that a time limit be established for it.
Think twice before agreeing to be a loan guarantee . And if you accept, before signing it is better to read the entire document and solve all the doubts you have regarding your responsibilities.