There are thousands debating over whether to go for loans without guarantors or with a guarantor. It’s easy to see why so many debates the issue as it’s not always easy to know which way to turn. You have many who believe guarantors are the only way to secure a loan, while others just aren’t so sure. Maybe, it’s time you learned what a co-signer and guarantor are liable and responsible for. Do you know? If not, read on, and find out what you could be liable for.
Co-Signers Are Liable Should the Primary Miss Payments
Let’s say you haven’t received any money from the loan, but as a co-signer, you have placed yourself into a position where you have signed on the loan agreement. Essentially you’re signing for part of the money and as such, you are responsible and technically liable for any monies owed. For instance, the primary on the loan hasn’t made a payment in two months; the lender could choose to go after you whether they can find the primary on the loan or otherwise. Why is that? You signed the loan contract and you essentially place yourself as a guarantor for payment. That’s why loans without guarantors have become so popular as there’s no need to have a co-signer or guarantor.
You’re Responsible To Hand Over Any Personal Assets Used As Collateral
Let’s say you put up your vehicle to secure the loan, you have placed your vehicle as security and if the borrower defaults, the car may be seized to offset the debt. However, as a co-signer you must be prepared to hand over the vehicle or any asset you personally own. You’re responsible for that, and if you fail to do so, you can be sued for the property and any additional monies owed. Loans without guarantors might not be something you’ve thought about, but they must be because co-signing brings a degree of risk. Click here!
The Potential Fallout
There are a host of risks that come from being a guarantor or co-signer on a loan. Firstly, the primary borrower could fail to make payments or default entirely and if that happens, you’re landed with the responsibility to pay. Secondly, your credit might be impacted by the loan whether it’s fully paid or defaulted. Lastly, you could lose friends or family members over the loan. If someone fails to repay for whatever reason, it puts a strain on the relationship and it’s hard to overcome. That is why loans without guarantors have become so popular because there’s no need to co-sign for anyone.
Choose Your Poison Carefully
While it’s nice to be a co-signer or guarantor for someone who can’t secure a loan, there’s always an element of risk involved. Sometimes, the loan will go without a hitch and the friendship survives, but there may also be times where things go wrong and the relationship is lost – not to mention you’re stuck with a loan! That’s why you have to know your responsibilities and what you’re liable for should the worst happen. Maybe you should consider loans without guarantors in the future. More details in site: https://smallbusiness.chron.com/liability-cosigner-59588.html