Secondary form of repayment
People also ask
What does it mean to be a guarantor?
What is a guarantor? A guarantor is someone who agrees to be responsible for paying the loan if the borrower defaults. For example, if you were a guarantor for someone who is unable to repay his renovation loan, you could end up repaying the loan for him.
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.