Never Become A Loan Guarantor

Becoming a loan guarantor is a serious responsibility and should not be taken lightly. A loan guarantor is someone who co-signs a loan and agrees to repay the loan if the borrower is unable to do so. There are several reasons why someone may choose not to become a loan guarantor:

1. Risk of Financial Loss: As a loan guarantor, you are taking on the risk of financial loss if the borrower is unable to repay the loan. This means that if the borrower defaults on the loan, the lender will look to you to repay the loan, and your credit score will be negatively impacted.

2. Liability: As a loan guarantor, you are also taking on legal liability for the loan. This means that if the lender needs to take legal action to collect the loan, you will also be named in the lawsuit.

3. Impact on credit score: Being a loan guarantor could have a negative impact on your credit score, as it will reflect on your credit history and credit reports.

4. Strained Relationship: Being a loan guarantor for a friend or family member can put a strain on the relationship. It can be hard to balance your relationship with the borrower with your responsibilities as a loan guarantor, and it can lead to disagreements and hard feelings.

5. Limited control: As a loan guarantor, you have limited control over how the borrower uses the loan and how they manage their finances. This can be a significant source of stress and frustration, as you have little influence over the borrower's actions.

6. Limited option to get out of the guarantee: Once you become a guarantor, it is difficult to get out of the guarantee, and it could be legally binding. Before becoming a loan guarantor, it is important to carefully consider the potential risks and drawbacks.

It's best to be cautious and not to become a loan guarantor unless you are fully aware of the risks and are prepared to take on the responsibility.