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.

---

Parent Loans or Student Loans ? What is Going to be Best for My Child?

Parent Loans or Student Loans ? what is going to... Read More

125% Equity Home Loans

If you are a homeowner in need of a home... Read More

Quickest Payday Loans - Things To Look For in a Cash Advance Company For The Fastest Loan Processing

To find the quickest payday loans, you need to look... Read More

Fast Cash Loans - When You Should Borrow and When You Should Wait

A fast cash loan should be an option used as... Read More

Financial Aid Options

Before entering college, you may find yourself pondering exactly how... Read More

A General Discussion about Unsecured Personal Loans in the UK Financial Market

Personal loans are offered by lenders such as banks and... Read More

What is a Secured Loan?

A secured loan is simply a loan that uses your... Read More

Payday Loans And Pawnshops: Comparing Two Popular Ways Of Getting Cash Quickly

I remember years ago growing up when you needed some... Read More

What is a Home Improvement Loan?

A UK Home Improvement Loan Can Give You The Home... Read More

Getting That Car Loan: Simple Interest Is The Best

So here's the situation: you are buying a car but... Read More

Shopping for a Personal Loan

Most Internet users are now extremely comfortable using the Internet... Read More

Are You In The Market For a Car Loan?

Car loans are a tempting way to purchase a new... Read More

No Credit Car Loans - Even With No Credit History, You Can Still Get Approved

Even it you have no credit history, you can still... Read More

Where to Get Your Military Signature Loan

Military signature loans are easy to come by. When looking... Read More

Seven Tips For Credit-Enhancing Your Business Loan

What are the avenues available to businesses with weak credit... Read More

Guide to Secured Personal Loans

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

Taking the Time to Find the Best UK Loans

When looking for UK loans, it's always important to take... Read More

Finding and Getting Bad Credit Loans

If you don't know where to turn for bad credit... Read More

Zero Zero Financing on Automobiles in Retrospect

Some say that the automobile industry saved the economy during... Read More

If You?re Looking To Borrow Larger Sums of Cash a Home Equity Loan Could Prove Ideal

There are a number of different loan products available today,... Read More

Bad Credit Wedding Loans in Case You want to Race Towards the Altar with Bad Credit

So you are engaged. Congratulations. It was not easy. What?... Read More

Meeting the Balance of Agricultural Financing

Agriculture loan guaranteesFor better understanding of the agricultural loan guarantee... Read More

A Borrowers Guide to Bad Credit Loans UK

If you find yourself in a situation where you need... Read More

No Faxing Hassle-Free Payday Loans Can Be Yours

No faxing payday loans are the wave of the future.... Read More

Bad Credit Loans

Obtaining bad credit loans can be a real challenge. If... Read More

PayDay & Cash Advance Loans Online ? How Do Online Payday Loans Work?

How online payday loans or cash advance loans work? Online... Read More

Fast Money: A Guide to Fast Secured Loans

Here is a useful guide to fast secured loans. Here... Read More

It Only Takes a Few Simple Steps To Avoid Student Loan Debt

Student loan debt is a problem that affects many former... Read More

Personal Loans for Unemployed ? Liberating You from the Tangles of Unemployment

Like most of the contingencies (the after effects of unemployment... Read More

A Guide to Debt Consolidation Loans

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

Applying for a Payday or Cash Advance Loan Online

Applying for a payday loan online is a quick and... Read More

A Guide to Finding an Adverse Credit Homeowner Loan

If you're searching for an adverse credit homeowner loan, you... Read More

Guide to Personal Loans

Here is a useful guide to Personal loans. What is... Read More