The government of India has taken significant steps to increase the home-ownership in India. The home loan rates are at an all-time low and are expected to remain low for another 6-12 months, making it a lucrative time to opt for loans and own a property. Along with being financial assets, homes are also an emotional asset in India. Most people don’t always have the money they require to buy a home and loans are the financial aid that supports big decisions like buying a home. When a financial institution or a bank lends money to an individual or entity, they do it so with a certain guarantee or based on trust that the recipient will repay the amount with an added benefit or interest.
Modern-day banking has become quite convenient as they allow people to borrow finances easily through different kinds of loans even online. Loan guarantors are sometimes required by lenders when they think the borrower’s loan repayment capacity is lacking. Having a guarantor registered while availing of the loan implies that in case of a default, the guarantor would take care of the remaining payment in place of the borrower.
Requirements and Eligibility Criteria
There is no harm in becoming a guarantor for a personal loan but in case the borrower defaults on the loan, the worthiness of your credit could be affected negatively. Hence, before agreeing to be someone’s guarantor, you must consider the following:
- Even if the borrower is your close friend or relative, you should still always check their creditworthiness before opting as a guarantor because it can impact you negatively if the borrower isn’t capable enough to repay the loan
- You may have to reconsider being the guarantor for someone else if you are going to need a loan for yourself soon.
- The lenders consider your financial status as a guarantor while determining your credit score and your eligibility for a personal loan could get affected during this process
- Consider why the borrower needs a guarantor as this will help you get clarity of the credit history of the borrower and lets you make a smart decision
- Have a backup plan because if the borrower defaults, the burden of the loan comes down on you. Make sure that you are capable enough to take care of the loan and become a guarantor only if the loan amount is within your repayment ability.
At RGS Realty, we believe in absolute transparency in all of our processes and deals. We understand the importance of your hard-earned money and respect it with utmost integrity and gratitude. We strive to deliver a satisfied and trustworthy experience for all of our customers. Visit www.rgsrealty.com to know more about us and get in touch with us!