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Secondary form of repayment
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What is a a guarantor?
A guarantor is a financial term describing an individual who promises to pay a borrower’s debt in the event that the borrower defaults on his or her loan obligation. Guarantors pledge their own …
Do I have to tell my lender if I’m a guarantor?
If you apply for a loan in the future, you’ll have to tell your lender if you’re guarantor on any other loans. They might decide not to lend to you, even if the loan that you guaranteed is being repaid.
What is a guarantor or co-signer on a loan?
Banks/lenders require, as an added security measure, someone to take responsibility for the principal applicant (primary borrower) in case of loan default. The person can be a guarantor or co-signer.
What is a limited guarantor on a loan?
A limited guarantor may also only be responsible for backing a certain percentage of the loan, referred to as a penal sum. This differs from unlimited guarantors, who are liable for the entire amount of the loan throughout the entire duration of the contract. Guarantors aren’t solely used by borrowers with poor credit histories.