My father is 68 and has been accepted for a loan on the condition he has a guarantor. The loan is for a 10 year period. I would willingly be his guarantor, but i dont want to be left with his debt if something happens to him. If my dad died before the loan was repayed would i still be liable? Or am i only liable if he's alive and dont keep up repayments?
Some one please help as I am in a real dilema!
2007-07-19 04:07:04 · 5 answers · asked by Anonymous in Business & Finance ➔ Credit
You are basically saying that you will guarantee the loan if for some reason your father does not or can not pay. So if something happens to him the loan amount would be taken out of the estate. Anything that was still remaining on the loan you would be responsible for. This guarantee also applies if he does not pay the loan you would also then be responsible for making the payments.
2007-07-19 04:12:27 · answer #1 · answered by OC1999 7 · 1⤊ 0⤋
By signing on as a guarantor, you are "guaranteeing" that the loan will be paid, as promised. You will be financially responsible for the debt, should your father either pass away or default on the loan. It's the same thing as co-signing on a loan.
The creditor is going to have to verify that you are capable of making the payments, as well. This means they'll pull your credit report as part of the application process, and that the debt will go on your credit file, as an obligation. Even if every payment is made on time, it could impact *your* ability to obtain credit later on, simply because you have this "potential debt" hanging over your head.
In some instances, the lender will only go after the guarantor, after all other methods of collection against the primary borrower have been exhausted. In most cases though, they'll come after the guarantor, if even one payment is late.
If you're committed to wanting to help him, believe with every bone in your body that he won't default on any payments, don't care that it will impact your ability to obtain loans, and simply fear him dying before it's paid, then look into the life insurance policies that are often available for loans of this type. In the event he passes on, the insurance will pay off the individual debt.
2007-07-19 11:41:45 · answer #2 · answered by KumBaYa 3 · 0⤊ 0⤋
You would be liable for this debt. Be very careful. You do not say where you live but in many US states there are less consumer protection laws in favor of a guarantor than a borrower. I have worked for a bank, as a bank examiner and for a CPA which specialized in banks. I cannot tell you how many attorneys who have told me it is easier to collect from a guarantor than a borrower.
Ask yourself a question: Why does the lender want you to be a guarantor as opposed to a co-borrower?
2007-07-19 11:37:28 · answer #3 · answered by Adoptive Father 6 · 0⤊ 0⤋
YOU are liable until paid.
In the event of his death, if he has life insurance and or cash assets, he can stipulate in his will that all obligations be paid first, including this one.
2007-07-19 11:16:52 · answer #4 · answered by ed 7 · 1⤊ 0⤋
OC1999 is correct once again.
2007-07-19 11:39:07 · answer #5 · answered by ? 7 · 0⤊ 0⤋