Did your friend or family just ask you to be a loan guarantor? Well, this is very common when you maintain good credit eligibility and a high income. You can always become a personal loan guarantor to help your friends or family. However, it is important to pay attention to a few facts and information precisely. Before taking the decision to become a loan guarantor, it is important to know the important details about being a loan guarantor. Here’s all that you need to know before becoming a personal loan guarantor for an instant personal loan online.
What is a loan guarantor?
A loan guarantor is the person that takes the security or guarantee of the loan if you do not meet the eligibility requirements. If an individual does not meet the eligibility criteria, they can take out a loan with the help of a loan guarantor. It is similar to collateral or security that secures a personal loan. A loan guarantor has to repay the loan if the individual is not able to make the repayment. An individual can become a loan guarantor only if they are financially stable and have a good income and credit score.
Important things to know before being a loan guarantor
It can harm your credit score:
It is important to know that if the individual is not paying the EMI, you will harm your credit score. It is important to consider this factor. Your credit score is an important factor, and you need to take this into consideration. Any delay or missed payment leads to a loss of credit. Take this information into consideration before making a decision.
It can damage your savings:
If an individual is not able to repay the loan and defaults, the financial institutions will recover the personal loan from the loan guarantor. You will end up damaging your savings. The financial institutions will recover the default amount from you. This way, you will end up damaging your savings and investments.
It can become a debt burden:
When you become a loan guarantor, the debt is added to your credit report. Therefore, you will always have a debt burden. This way, you will not be able to take a new loan at the time of an emergency.
Finishing up:
For a smooth and affordable personal loan online apply process, visit any NBFCs. They offer the best instant personal loan online at an affordable personal loan interest rate.
