Lack of sufficient creditworthiness is a common obstacle that occurs on the way to obtaining a loan. The solution in such a situation may be a guarantor, who becomes part of the transaction as its security. What basic rules characterize a loan with a surety?
Classic bank credit, unlike loans and payday loans, is characterized by relatively strict requirements for the consumer. Various formalities are necessary, the purpose of borrowing must be specified, and creditworthiness is also an important issue. Many potential borrowers meet with a refusal, which is the result of the bank noticing, for example, negative entries in the BIK register.
Poor creditworthiness, however, does not have to be the final parameter determining the lack of chances of getting a loan. The rescue board may be a loan with a surety, i.e. a loan granted with the participation of a trusted third party.
Loan with a guarantor – basic principles and assumptions
A guarantor, also often called a giver, is a person who acts as a security for the bank. According to its title, it guarantees the borrower and declares that in the case of delays in repayment or failure to repay the loan, it will assume the obligation to settle the obligation under the terms specified in the contract. The guarantor acts as a party, which is why separate documents for receipt are prepared for him.
Taking a loan with a guarantor is a facility towards a bank that receives a repayment declaration in exchange for a lack of creditworthiness and the consequent poor financial credibility of the consumer.
Sponsor – who can become one and what must he remember?
Becoming a guarantor while granting a loan is a role that requires a lot of responsibility and a stable financial situation. The good condition of its funds is demonstrated by the guarantor fulfilling the basic condition – having permanent employment and the related fixed income. What’s more, the role in play can be taken up by a person who is full-time as well as self-employed and entrepreneurs.
Other important conditions that every guarantor must meet is being an adult and showing good creditworthiness. By “good ability” is meant the lack of any bailiffs’ activities. In addition, there is no arrears in payment of liabilities and no negative entries in the context of loans or credits repaid to date. Interestingly, a survivor may have unpaid financial liabilities on his account, but they will have a significant impact on creditworthiness. The situation is similar with the commitment of the guarantor after the surety transaction – the potential amount of eg a loan will be lower.
The guarantor may or may not be a relative or relative of the consumer. The choice depends on personal arrangements between the borrower and the giver – in practice, they may even not know each other personally. In the interest of the guarantor, however, it is advisable to trust the borrower with confidence and awareness of his financial capacity. Otherwise – the willingness to help can quickly be abused by a dishonest consumer.
What type of loan can you provide for?
The guarantor may act as guarantor when granting any type of loan. However, he must remember that the detailed requirements depend on the type of commitment. In the case of, for example, ordinary cash loans for less expensive expenses, the bank will not ask for a certificate of financial interests.
What else, however, in the case of a mortgage on a house or flat. In this situation, the survivor must present the area and value of his property. It will be desirable to own real estate or expensive property, such as plots of land.
What are the rights and what are the obligations of the guarantor?
There are already mentioned the conditions and challenges that every person making a credit for a third party’s loan must remember. It is worth citing the issue of rights and obligations that rest on each loan guarantee.
- The bank is obliged to immediately inform about any problems with the timely repayment of loan installments by the consumer.
- The guarantor can always check the current repayment status of both the bank and the borrower.
- The guarantor may undertake the above actions in an unlimited and unlimited scope.
- The guarantor is obliged to repay the loan if the consumer ceases to do so.
- The repayment must be made on the terms specified in the loan agreement. Installments of a certain amount must be adjusted at the initially accepted dates.
Withdrawing from a loan guarantee
He will be a guarantor of this decision requiring a huge responsibility. If a withdrawal decision is taken during the loan period, unfortunately, the financial institution can accept it only in certain circumstances. For example, a bank may release a guarantor from his obligations if it turns out that the consumer has no problems with timely repayment of the loan and it is possible to find another form of repayment security.
However, if the repayment takes place in an irregular and problematic way, the bank can not resign from the only security which is a guarantee for him to recover the borrowed money.