When a person or an entity takes a loan, then the bank giv- ing the loan builds various safeguards into the process. One of them is to have a margin limit by taking a security, so that there is a way in which they can recover the money if the borrower defaults on the loan. Another route adopted is that of asking for a guarantor so that in case the borrower does not pay, then the guarantor will be called upon to make the payment.
A good check is made of the guarantor and their financial position before completing the transaction. Many people do not know but their acting as a guarantor also shows up in their credit scores so that banks will take this factor into mind while lending to them. The situation is impacted in case the borrower defaults for which a person is a guarantor. One has to be careful while agreeing to act as a guarantor because this can have a double impact. First of all them might be asked to repay the loan and at the same time there will be an impact on their credit position also and care should be taken on both fronts.
A good check is made of the guarantor and their financial position before completing the transaction. Many people do not know but their acting as a guarantor also shows up in their credit scores so that banks will take this factor into mind while lending to them. The situation is impacted in case the borrower defaults for which a person is a guarantor. One has to be careful while agreeing to act as a guarantor because this can have a double impact. First of all them might be asked to repay the loan and at the same time there will be an impact on their credit position also and care should be taken on both fronts.
0 comments:
Post a Comment