Guarantee for a Loan: Smart or Not?
Your brother, sister, friends or son or daughter for a loan. Because they are close to you and you trust them, you will probably do the same. You are convinced that they will repay their debts. Commitment to act as a guarantee appears to be just a formality to help another person in obtaining credit. But think about it carefully, because guaranteeing is a big responsibility. Do you already know what the consequences are?
Guarantee for a loan, what does that mean?
If you want to take out a loan, the bank can ask you for a guarantee. This guarantee is intended to ensure the repayment of the credit. If the borrower finds himself in a situation where he/she cannot pay off his / her debts, someone who can act as a guarantor may intervene.
Who can act as a guarantor?
Anyone can decide to stand surety for a loan without having any relationship with the borrower. If you act as a guarantor, you must have legal competence from intellectual into. In addition, you must meet certain conditions. From bank to bank, it is important to use the information provided by the bank and the bank.
In the future, there is a need for financial support for financing or financial services. Both either the borrower or the guarantor will receive a copy of the credit agreement. Normally, the duration of the guarantee is the same as that of the borrower. However, if there is an indefinite credit agreement, the guarantor’s contract cannot be longer than five years. The contract can only be extended with the consent of the guarantor.
The amount to which the guarantee applies may not exceed the amount of the loan plus deen. From the interest of the welder and the hedgehog in 50% of the principal. A financial institution may also not request any costs or compensation from the guarantor.
What are your rights as a guarantor?
Securing a loan as a third party can have serious consequences. It is therefore very important that you are properly and fully informed.
You have the following rights:
- To obtain Credit: creditor or you must inquire about the duration of the commitment in amount. You must also receive a copy of the proposed credit agreement. The guarantee must be drawn up in writing and must contain mandatory legal statements.
- During the term of the credit: the lender must keep you informed of any changes that can be made to the contract. The lender must also remind you each year that you are the guarantor. Moreover, he must keep you informed of the outstanding interest in costs. You must also be warned when the borrower encounters problems paying his loan or if payment facilities are allowed.
From specific rights in proceedings depend on the type of guarantee:
- Ordinary guarantee: the creditor initially applies to the borrower for repayment and has used all legal remedies against him. Not if the creditor cannot receive (full) payment from or the borrower, he can turn to or pay a deposit.
- Joint and several guarantee: from principal debtor to guarantee on an equal footing. The creditor can demand the entire repayment from both the borrower and the guarantor, without the creditor having to prove that the borrower is insolvent.
- Indivisible guarantee: When several people stand surety, ask the giver of the full sum of the loan.
- Limited guarantee: with this form of guarantee, the amount or duration of the guarantee is limited.
- Mortgage guarantee: in the aforementioned case, grant or guarantors, for example, or parents of a child who wants to take out a housing loan, a mortgage on their house as security.
What happens if the borrower does not repay the loan?
The consequences depend on the type of guarantee that you have signed. If you have chosen the ‘normal deposit’ then you will have to take action in the following cases:
- When the borrower has not repaid the last two installments of the loan
- If the borrower has not yet repaid at least 20% of the total amount to be repaid
- If from borrower has not yet repaid at least 20% of the late payment
The lender must notify the borrower by registered letter that he has overdue payments. If the borrower does not pay his debt within one month after sending the registered letter, the lender can approach the guaranteeing party for paying the loan.
Is or Guarantor protected?
After signing the guarantee contract you still have fourteen days to change your mind. In that period you can optionally choose to (partially) cancel your commitment. For this you must prove that your commitment is not in proportion to your assets or income. You must also ask yesterday for admission to the labor court if the borrower and one of the debt settlement sits.
If you have paid off the debts, you can always reclaim your money from the borrower as a deposit. Usually says says will yield little because the borrower is insolvent.
Please be very aware of that decision to sign a guarantee for a loan. Make sure you read the contract carefully and carefully consider what impact says it has on your financial situation if you should indent. Guaranteeing a loan can be a good idea to help a neighbor or loved one, but it can also quickly put you in debt.
If your friend, family member or loved one has not yet found the loan that suits him best, consider comparing all financial institutions.