Be Wary of Guaranteeing a Loan

You need to be wary of guaranteeing a loan. What would you do if a friend or relative asked you to guarantee a loan? You would probably like to help them by agreeing to guarantee the loan but consider your actions carefully first and make sure you understand what it involves.

You are being asked to guarantee a loan. Think carefully before you do. If the borrower does not pay the debt, you will have to. Be sure you can afford to pay if you have to, and that you want to accept this responsibility.

You may have to pay up to the full amount of the debt if the borrower does not pay. You may also have to pay late fees or collection costs, which increase this amount.

The creditor can use the same collection methods against you that can be used against the borrower, such as suing you, garnishing your wages, etc. If this debt is ever in default, that fact may become a part of your credit record.

Studies of certain types of lenders show that for guaranteed loans that go into default, as many as three out of four guarantors are asked to repay the loan.

If you guarantee a loan and your friend or relative misses a payment, the lender can immediately collect from you without first pursuing the borrower. In addition, the amount you owe may be increased - late charges - if the lender decides to sue to collect. If the lender wins the case, your wages and property may be taken.

Despite the risks, there may be times when you want to guarantee a loan. Your child may need a first loan, or a close friend may need help. Before you guarantee a loan, consider this information:

Be sure you can afford to pay the loan. If you're asked to pay and can't, you could be sued or your credit rating could be damaged.

Even if you're not asked to repay the debt, your liability for the loan may keep you from getting other credit because creditors will consider the guaranteed loan as one of your obligations.

Before you pledge property to secure the loan, such as your car or furniture, make sure you understand the consequences. If the borrower defaults, you could lose these items.

Ask the lender to agree, in writing, to notify you if the borrower misses a payment. That will give you time to deal with the problem or make back payments without having to repay the entire amount immediately.

Make sure you get copies of all important papers, such as the loan contract. The lender is not required to give you these papers; you may have to get copies from the borrower.

You may freely reprint this article provided the author's biography remains intact:

John Mussi is the founder of Direct Online Loans who help UK homeowners find the best available loans via the http://www.directonlineloans.co.uk website.

---

A Guide to UK Secured Homeowner Loans

Trying to find good UK secured homeowner loans might seem... Read More

Military Payday Loans! The Before Pay Check Financial Fiasco, is History Now

Working under the most prestigious service of the country ?... Read More

Secured Loans Tips

Here are some useful secured loans tips. Secured loans enable... Read More

Secured Loans Guide

Secured loans are becoming increasingly popular due to their flexibility.... Read More

A Consumers Guide to Getting a Bad Credit Loan

Here is a useful guide to getting a bad credit... Read More

Debt Consolidation ? Watch out for Payday Loans

Most any large city has a number of small shops... Read More

Shopping for a Payday Loan

You wouldn't consider buying a new pair of shoes, a... Read More

When the Bank Says NO!

Factoring has been practiced for centuries. The Romans sold promissory... Read More

Business Credit Scoring: Is It a Killer Application or Application Killer?

In his 1968 seminal novel, 2001: A Space Odyssey, Arthur... Read More

Thinking Of Co-Signing For A Loan? Read This First

It is quite common for someone, who is having trouble... Read More

Easy Cash Advance - Payday Loans Online are Quick

Cash advances have become quicker to process with online payday... Read More

Taking the Edge Off of Military Motorcycle Loans

So you have decided you want a motorcycle and you... Read More

How to Get a Business Loan in Five Steps

Need funds to startup or expand your business? Follow these... Read More

How to Find a Loan or Mortgage with Bad Credit

If you have bad credit and you are trying to... Read More

Personal Loans - To Make A Personalized Financial Agenda

The phrase 'tailor-made' ought to be made for personal loans.... Read More

Guide to Bad Credit Loans

Here is a useful guide to Bad Credit loans. Bad... Read More

How to Finance a Small Business

Confused by how to finance a small business? One key... Read More

What is a Homeowner Loan?

A Homeowner Loan is a way of using the equity... Read More

A Guide to Debt Consolidation Loans

Should you find yourself overcome by debt, you might want... Read More

A Brief Look at Homeowner Loans

Homeowner loans are useful ways to get the things that... Read More

Federal Debt Consolidation Loans For Students

For American students, the U.S. Government came up with a... Read More

Cash Advance Payday Loans

The ads are on the radio, television, the Internet, even... Read More

Guide to Secured Personal Loans

Here is a useful guide to secured personal loans. A... Read More

How To Save Money On Car Loans

Have you noticed that everyone seems to have a newer... Read More

Loans for Doctors ? Financial Funding for Healthcare Professionals

The revolution that has affected everyone's financing technique is online... Read More

Quick Cash Loans Online - A Fast Way to Get an Emergency Cash Advance

If you need a fast way to get an emergency... Read More

Faxless Payday & Cash Advance Loans - Fast Cash, No Faxing Loans, The Easiest Payday Loan Process

If you are in a hurry for a payday loan,... Read More

Finding the Right Bad Credit Loan UK

If you live in the United Kingdom and find yourself... Read More

Get a Low Rate on a Secured Online Loan

Secured loans have become very popular over recent years, with... Read More

Cant Wait For Payday? Try Check Advance

Check advance can come in really handy when you're waiting... Read More

Shopping for Loans Online

When looking for loans online, you might find yourself wondering... Read More

Navigation After Financial Closure - Bankruptcy Personal Loans

Bankruptcy has a stigma attached to it that is hard... Read More

Instant Cash Advance Loans - Take Advantage of The Convenience of The Payday Loans Available Online

Cash advance loans not only provide you with instant cash,... Read More