Think twice to sign as a guarantor
Recently I read an article written by Geeta Nair
If the person for whom you were a guarantor defaults on his payments you can be sure the law will catch up with you. Under the Securitisation Act, in case your borrower friend defaults on his loan payment the bank can easily recover the money in around six months' time from the guarantor All your personal assets could be attached including bank balances, property and investments leaving you bankrupt. But then, you cannot always refuse being guarantor, especially in family or even close friends. To be on the safer side you can consider standing guarantee to an amount of upto 1/3rd of your gross income. Debt exposure beyond this figure can mean financial disaster. If you yourself are already in debt, limit the amount further more.
Now a days some aggressive banks giving away loans with out any third party guarantee which saves the day for me.
If the person for whom you were a guarantor defaults on his payments you can be sure the law will catch up with you. Under the Securitisation Act, in case your borrower friend defaults on his loan payment the bank can easily recover the money in around six months' time from the guarantor All your personal assets could be attached including bank balances, property and investments leaving you bankrupt. But then, you cannot always refuse being guarantor, especially in family or even close friends. To be on the safer side you can consider standing guarantee to an amount of upto 1/3rd of your gross income. Debt exposure beyond this figure can mean financial disaster. If you yourself are already in debt, limit the amount further more.
Now a days some aggressive banks giving away loans with out any third party guarantee which saves the day for me.
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4 comments:
Trusting people , and also with money, is very difficult nowadays!
You are absolutely correct Sania! Little bit of caution would save lots and lots of trouble. Thanks for your gracious comments.
hi jhon. ur correct. i also personally got a bitter experience by putting a sign. eventhough i got educated they wanted my finger prints as gurantee(as sign may change after sometime).
Thanks a lot, Mr. Varadharajan for sharing your experience. I agree with you. To save our skin, we need to be cautious. Thanks again.
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