A guarantor on a loan is basically someone who agrees to take on the responsibility of paying off the loan if the borrower defaults on the loan. If you are a guarantor for a person who cannot pay back their loan, you might end up paying back the loan on their behalf. You will basically be the one who will pay for his loan.
Being a guarantor for someone is a serious and risky commitment to act as a guarantor on a loan. It can mean any of the following responsibilities:
- You will have the liability for all future advances and outstanding debts until the guarantor is released from the obligations by the lender.
- Being a guarantor means you wil be liable for additional interests, legal costs, and further charges when there is a delay in payments.
- You will need to pay the debt on the borrower’s behalf.
- The lender may take action against you with no need for them to take action agains the borrower first.
- You won’t be able to recover the money in the future from the borrower.
So why do people need others to guarantors for their loans? Maybe there is an emergency and they need a fast infusion of capital, or they want to establish credit for a home mortgage or purchase a car. These are the reasons people need a guarantor because either they have no credit or poor credit. When you obtain a loan with a guarantor, lenders don’t lower interest rates just because the guarantor has a good credit history. There is also the chance that the guarantor’s credit history will be affected if the principal borrower fails to pay back the loan.
So why explain all of this? The reason is why wait till you need a loan? Prepare your life for situations where you need credit and you can have a good credit score, so you can become independent of a guarantor and also obtain the loan amounts you desire at low-interest rates. How can you do this? There are many ways. First, you can Do It Yourself. The Credit Sorcerer has many DIY eBook Credit Repair and Financial Funding eBooks at your disposal to show you how to obtain good credit and high-limit credit cards. But maybe you don’t have the time or want to get your credit repaired fast and easily. The Credit Sorcerer offers Credit Repair Consultation at a low fee. The best part is we guarantee that if you follow our The Credit Sorcerer Apprentices guidance and don’t see a credit increase in less than 90 days, we guarantee your money back. How can you not take advantage of these opportunities to become financially independent and Credit positive? The Credit Sorcerer offers a list of services for individuals and companies that want to establish positive credit and high-limit credit cards. Contact us today and let me show you the way!