Security and assurance—that’s what instantly comes in mind when it comes to lending something valuable or when selling something that is to be paid on a future date. When a borrower comes to us to borrow money or to buy something on credit, a mutual acquaintance to guarantee the borrower’s integrity and creditworthiness is what we need the most. Being a guarantor entails a lot of risks, however, we may find it necessary at times when we have to lend a helping hand to a friend in need.
FREE 40+ Guarantor Forms in PDF | MS Word
1. Guarantor Declaration Form
2. Student Guarantor Form
3. Guarantor Details Form
4. Next Generation Guarantor Form
5. Estate Guarantor Form
6. Free Loan Guarantor Form
7. Individual Guarantor Application Form
8. Affidavit Guarantor Form
9. Full Reference Guarantor Form
10. Guarantor Assessment Form
11. Guarantor Document Form
12. Guarantor Residential Agreement Form
13. Guarantor Application Form
14. Parent Guarantor Form
15. Guarantor Legally Binding Form
16. Guarantor Information Form
17. Tenant Guarantor Reference Form
18. Corporate Guarantor Form
19. Guarantor of Payment Form
20. Bank Guarantor Form
21. Apartment Rental Guarantor Form
22. Employment Guarantor Form
23. Guarantor Certificate Form
24. Guarantor Indemnity Form
25. Housing Guarantor Form
26. Manager Guarantor Form
27. Guarantor Consent Form
28. Guarantor Form and Credit Aauthorization
29. Sponsor Guarantor Form
30. Guarantor Terms Form
31. Guarantor Substitution Form
32. Guarantor Finance Enquiry Form
33. Home Loan Details Guarantor Form
34. Patient Information Guarantor Form
35. Parental Guarantor Form
36. Guarantor Statement Form
37. Pediatrics Guarantor Information Form
38. Alternative Guarantor Form
39. Co Signer Guarantor Form
40. Properties Guarantor Form
41. General Guarantor Form
What Is a Guarantor Agreement?
Guarantor agreement is a loan contract between three parties: the borrower, the lender, and the guarantor itself. In this contract, the guarantor acts as the party who vouches for the borrower’s integrity and trustworthiness. In this sense, the guarantor prioritizes the borrower before the lender. Also, guarantors themselves assume the responsibility of repayment in case the borrower fails to do so.
Loans and credits are beneficial to anyone, especially in times where the lack of means to make ends meet may spell the difference between life and death. As creditors and lenders, however, doubt and skepticism are more likely to come to us first before our altruistic tendencies do. But with guarantor agreements, removing doubts about a would-be borrower is equally possible as with the desire to lend a helping hand.
Guarantor Forms: The Risky Business of Guarantor Agreements
Trust is the initial capital that anyone in the business of lending invests first. It is through this that lenders feel a sense of security and certainty despite the gamble that they wittingly got themselves into. As with any type of business, lending itself also has its very own risks. In this sense, quickly trusting becomes a liability, as well as a headache in a blink of an eye.
Guarantor agreements do not guarantee the absence of uncertainty in the business of extending loans and credit. It is because relying heavily on a person’s credit score doesn’t ensure repayment from both the borrower and the guarantor. Besides, measuring a person’s integrity based on their credit score is nothing but one of the many credit myths in existence. And although lenders themselves pose a primary risk in lending and credit business, the same risk applies to guarantors as well. And, here’s why:
Guarantors Themselves Become Insolvent
Guarantor agreements are created primarily as a safeguard measure against nonpayment of debts by the borrower. Insolvency, on their part, is one of the main reasons why. It is the state of financial incapability caused by various reasons, and not only are borrowers prone to this but also guarantors as well.
Guarantors Running Away With the Borrower
Running away from their debts are common among borrowers, especially if they can no longer pay it or don’t plan on doing so from the start. Guarantors have the same tendency to run away too, especially if they and the borrower are well acquainted with each other.
Guarantor’s Refusal to Pay Unless Guaranteed of Repayment
Refusal to pay on the part of the guarantor is most likely to happen. This scenario is because they see themselves as a witness in a guarantor agreement and may to have not read the provisions as well. The only way to avoid this event is by telling them to sue the borrower as it is within their rights as the guarantor of the loan.
Why Promote Guarantor Agreements?
Extending loans requires one loan applicant to furnish proof of its capacity to pay for the money that they plan to borrow. Credit scores, billing statements, and others are some of the documents that loan applicants need to show as proof. Traditional methods of extending loans have limitations that extend to a would-be borrower’s capacity for repayment, thus making it a bit inaccessible even for a regular joe like struggling college students, for example. Aside from that, using traditional lending methods might not be instantly profitable, especially if you’re still new to the lending business.
Guarantor agreements are very versatile as well as helpful tools whose application extends to almost any type of loan that you’re planning to offer. Student loans, car loans, and housing loans are examples of loan types in which you can apply guarantor agreements. Versatile, because it allows you to offer your customers or clients the possibility to apply for a loan without showing proof of capacity for repayment. Helpful, because it provides those wish to borrow money by just bringing someone who can guarantee for the loan’s repayment.
How Do You Implement Guarantor Agreement
Guarantor agreements are suitable options for anyone who has difficulties in securing a loan or buying something on credit. These difficulties may stem from having low credit scores or are just starting to build their credit reputation. Guarantor agreements allow would-be borrowers to secure a loan by having someone to vouch for their integrity and trustworthiness, as well as their capacity to pay for the money that they owe. Now, if you are new to the lending business and are looking to extend loans through this means, then here’s how you can implement a guarantor agreement in your loan applications.
Step 1. Weigh In The Risks
Guarantor lending is prevalent among those who are just starting applying for loans. These people could either be students, the employed, or people whose credit reputation a yet to be built. Or, they could be people whose credit scores are low enough for them to secure a loan all by themselves. All in all, guarantor loans are the usual go-to for people whose capacity to pay for the loan is questionable. And if you decide to extend such an offer out of generosity, it wouldn’t hurt that much. With that, guarantors need to put their guards up and weigh in the risks beforehand.
Step 2. Transfer It On Paper
Once you’ve weighed all the risks and decided to offer guarantor loans, it’s time to put all your ideas into paper. The first thing you should do is grab a blank piece of paper and create a draft of its terms and conditions. Aside from that, it is also during this phase that you elaborate on each party’s rights, duties, and responsibilities as well. Please do take note that this particular step is not about the actual creation of the loan agreement itself. But, this step is about drafting or creating a rough sketch of it. What this step does is that it allows room for adjustments or revisions and prevents you from repeating the whole process due to mistakes and errors.
Step 3. Legal Advice Is Always Necessary
Consulting a lawyer will assure you that everything written in your draft is legal. For you to do that, have a lawyer review your draft. What will happen during that time is that the lawyer will meticulously check for errors, or even improve the document. What’s more, is that any revision in the document’s provisions can be readily done right away, on-site. Seeking legal advice beforehand not only gives the document a legal effect, but it also makes it more legitimate in the eyes of your clients.
Step 4. Provide Options to Your Borrower
Options offer a sense of security in times of uncertainty, and providing one to your clients will certainly wash their worries away. This scenario is especially important in the event the principal debtor refuses to pay or run away from its obligation. These cases are what dissuades people from becoming guarantors of a loan. However, such fear is understandable. And to avert that situation, telling them about the options to take in case such an event happens will surely enlighten them that there is nothing to fear.
What qualifies me to become a guarantor?
Becoming a guarantor presents similarities to being a borrower. A person must be on or over the age of 21, and they must be financially stable. However, legal age and financial stability do not instantly mean a person becomes qualified to become a guarantor. A guarantor must also possess a high credit score and an excellent credit history. These requirements help solidify that the person can pay back his debts on time.
What are other means of repayment for a guarantor?
For one, you can use your external sources of income to pay back the bank should the borrower fails to pay on time. Such sources of income include your savings, collateral damages, and income from your family if they are willing to lend you. Another alternative is loaning from a different loan business, though it might be riskier than the previous options.
How do I get out of being a guarantor?
There are three ways on how you can go about this. First, when there are additional loans taken without your consent, you can ask any personnel from the bank to relieve you of the burden of taking another payment obligation. Second, if you cannot shoulder the amount your client wants, then you can ask the bank to ask another guarantor who is willing to take your place. The bank only allows the substitution of the guarantor if you can convince them. Third, if you have known the borrower for a long time, you can ask them or their close relatives to help you pay back earlier than expected. However, this scenario is not a legal one, and it only works if you have gotten to know the borrower well already.
Providing security and assurance is one of the core values of being a guarantor. Guarantors must do their best to give excellent service to their clients despite the business of a guarantor being one filled with risks and dangers. But being a guarantor does not entail that you do not have any assurance for yourself as well. With the help of guarantor forms, a guarantor now has legal protection from the law should the borrower not commit to his or her payment obligations and cause the guarantor problems. Assurance and security might be a guarantor’s best assets, but if they can’t provide those to themselves, the clients will not see them as good at handling other’s payment obligations.
FREE 6+ Employee Bio-Data Forms PDF
FREE 8+ Event Agreement Forms in Sample, Example, Format
FREE 5+ Trust Agreement Contract Forms PDF
FREE 10+ Sample Event Agreement Forms PDF
FREE 7+ Sample Loan Agreement Forms in PDF WORD
FREE 10+ Sample Patient Information Forms in PDF WORD
FREE 10+ Condominium Lease Agreement Forms in PDF DOC
FREE 7+ Sample Apprenticeship Agreement Forms in PDF WORD
FREE 9+ Safety Meeting Forms in PDF DOC
FREE 56+ Loan Agreement Form in Template PDF | DOC
FREE 10+ Sample Event Contract Forms in WORD PDF
FREE 11+ Lease Addendum Forms in PDF DOC
FREE 3+ Parking Space Rental Agreement Forms PDF
FREE 34+ Loan Agreement Form Samples in PDF DOC
FREE 9+ Copyright Registration Form Samples PDF