GUARANTORSHIP AS A FORM OF LOAN SECURITY

GUARANTORSHIP AS A FORM OF LOAN SECURITY

WHO IS A GUARANTOR?

A guarantor is a person who promises to pay the debt of the borrower in case of the default of the borrower on his or her financial obligation. In essence, a guarantor secures someone's loan by committing to pay the loan if the borrower fails to pay it.

Guarantors are asked to sign a loan form guarantee agreement – this is a legally binding document and once you sign it you become responsible for the loan repayments if the person you are acting as guarantor for cannot pay.

MAIN FACTORS TO CONSIDER BEFORE AGREEING TO BECOME A GUARANTOR?

  1. Are you able and willing to pay the loan amount?
  1. How likely is it that the borrower will be able to repay the loan?
  1. Are you ready for the consequences if you are unable to pay?
  1. Do you clearly understand the loan agreement with the Sacco?


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