Loan guarantor: If you are going to become a loan guarantor, then read this rule, notice can reach your home too.

Whenever someone needs a loan, a guarantor is needed to take a loan from the bank. To become a guarantor, there are many rules that have to be followed. If you become the guarantor of someone's loan, then you also have to sign many documents. Therefore, making a guarantor is not just a formality. If the borrower is unable to repay the loan amount, then notice can also come to your house. Therefore, it is very important to know the rules before becoming a guarantor of one's loan.

Great responsibility on the guarantor

Most of banks or any financial institution do not give loans without a guarantor. The guarantor of the loan would have had a big responsibility. If the borrower is unable to repay the loan, then legally it is the responsibility of the guarantor to repay the loan.

According to Yes Bank's website, a guarantor is someone who agrees to pay off someone else's loan. Being a guarantor is not just a formality to help the borrower but the guarantor is equally responsible for repaying the loan. However, each bank has made different rules for the guarantor.

Equal debtor

According to the rules, the person giving the guarantee of the loan to someone is equal to the borrower of the loan. In case of default, the bank first sends a notice to the borrower. If the reply is not there, then the bank sends a notice to the guarantor along with the borrower. First of all, the bank tries its best to recover the money from the borrower itself, but if he is unable to repay, then the guarantor is also held responsible for the default.

Why guarantor needed?

Although banks do not look for a guarantor on all types of loans, but when they do not get enough documents and the bank feels that the borrower will not be able to repay it, then in this situation they ask to bring a guarantor. If someone is taking a loan of a large amount, then a guarantor is required for this. Therefore, it is very important to know all the rules before becoming a guarantor of anyone.

Guarantor may have trouble

Our credit score plays an important role while becoming a loan guarantor. Your credit is checked as per the rules. For example, if you have taken a loan from the bank, then what is the status of its EMI. If using credit card, whether the bills are being paid on time or not. If the borrower is unable to repay the loan, then your credit score will also suffer. Then whenever you go to take a loan, you may have to face trouble.