There are several institutions out there that lend money to those who need to sort out their financial issues. Several circumstances may force one to borrow money. The need to pay emergency bills or cater for your business are some of the things that can force you to borrow money. We have heard of people who have set up businesses with money borrowed from the different lending institutions. Examples of lending institutions include banks and savings and credits societies. Some agencies have set up online platforms for issuing loans. All you have to do is fill in your contact details and the required information to prove your eligibility.
Banks and other lenders have their terms of service where you have to repay your loans in an agreed period with a certain percentage of interest. Failure to observe this will see you face specific penalties. Banks work closely with credit bureaus which help them in rating the credit score of their clients. Late payments will see you getting rated poorly by these departments. You may get blacklisted, and this will reduce your chances of accessing a loan. One can obtain a loan via a guarantor in such a situation. Lenders will want someone who can be held accountable in case the borrower fails to comply. There are several things you should consider before becoming someone’s guarantor. They include.
You should consider the amount someone you want to guarantee has acquired or is about to borrow. One should be able to figure out if they can match the payment of that amount in case the loan borrower fails to pay. You can negotiate with the borrower and explain to them if the amount is sensible.
Weigh the risk
One is advised to weigh the risks involved in this type of agreement before making up their minds. Figure out your ability to pay and the chances of the borrower to pay that loan. Find out if you will be providing any security as the guarantor. Some agreements may see you offering your house or car as security.
Relationship with borrower
Understand the kind of relationship you have with the person you want to guarantee. Measure the levels of trust between the two of you. Some people may take advantage of your close relationship which may lead to misbehavior when it comes to repayment. Write down an agreement that will see both of you agree to specific rules.