Do you think you can make payments on time? Do you need money urgently but have a bad credit score? Do you have friends and relatives who trust you, and will be willing to become guarantor of your loan? Then you can consider guarantor loan, if you are in need of money.
Other than guarantor loans, you can get payday loans if your credit rating is bad. Moreover, payday loans come with higher interest rate, additional charges, and lesser time duration to pay off the loan as compared to guarantor loans. This is the reason guarantor loan is your best option.
Working of Guarantor Loans
There is a guarantor in guarantor loans, who takes the legal responsibility of paying off the loan if the borrower is not able to pay back the loan on time. As this is reducing the risk for the lender on the unsecured loan, the interest rate of these loans will be lower.
When applying for the guarantor loans, you need to provide the details of the person willing to be a guarantor. The lender will send them an email, and call them to carry out checks regarding their income and credit rating. Once these things are confirmed, the guarantor will receive the text regarding the acceptance or rejection by the lender. The guarantor will only be contacted when the borrower stops making the payments, otherwise there will be no involvement of them during the repayment stage.
Rights of the Guarantors
Before and after signing the guarantee contract, there are some rights provided to the guarantor. These are mentioned below.
The guarantor has the right to get a copy of the contract of guarantee or guarantee letter, and any other documents that holds important for the loan transaction. Moreover, the guarantor should be informed regarding all the important details of the loan such as the account balance of the borrower, and other financial information. The borrower is the one who will consent to make that information available to them.
The guarantor can also sue the borrower if guarantor had to pay the amount borrower loaned from the lender. This is called as the right to be indemnified by the borrower. This is why, it is not only necessary to seek the advice from the lawyer before agreeing to become the guarantor, it is their right too.
If in the end, the guarantor feels that they do not want to be liable for the loan of the borrower, they can ask the borrower to pay off the loan and release them form the guarantee. This right can be practiced at any point during the term, even before the lender asks the borrower to pay back their debt. Terms on this right depends on the agreement all the three parties have agreed upon. Therefore, for this, they need to check with the lender.
As the guarantor is aware of their rights, neither the lender nor the borrower can make them liable for something they do not want, as long as it is not in the terms and conditions. So know your rights before you sign the agreement.