Financial organizations always try to insure themselves as much as possible against the risks of non-return of credit funds, therefore, they add to the main conditions for their receipt a clause on the mandatory availability of security.
As the latter most often are the real estate of the borrower and the loan guarantee of other solvent persons. The second type is the responsibility for securing the obligations of the borrower, which is assumed by the minor participant of the banking transaction. What is a guarantee and whether it is worth taking the responsibility of the borrower, we consider in this article.
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Many banks approve an application for a loan only if the applicant provides a guarantor. This is more concerned with obtaining fairly large loans. In particular, to take a loan for housing or a loan to buy an expensive car without a guarantee agreement, as a rule, is simply impossible.
Who can become a guarantor?
The person acting as additional security for another’s loan must meet all the basic requirements of the lender. Therefore, not everyone who agrees to assume the corresponding obligations is suitable for this role. At the same time, the list of certain requirements is usually general for both the one who draws up the loan and for the guarantors.
Banks pay special attention to the level of the current financial condition of the person planning to sign a guarantee agreement. In addition, the status of his credit file is also quite significant. Indeed, in the event of a borrower violating one of the terms of the contract to resolve a problem situation, the bank turns to the person who is also responsible for the repayment of the loan debt. Therefore, lenders always carefully check all participants in the transaction, including the guarantors, to avoid verification will not work. If the quality of the credit history and the income level of the latter are not satisfied with the financial institution, the borrower’s application may be rejected. Thus, the bank will get rid of the possible non-payment of the loan.
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Guarantors when applying for a loan provide a completely standard list of documents. Meanwhile, the list of requirements for such persons often includes a lack of criminal record and other, less serious, problems with the law.
What should be done before signing the contract: how to avoid responsibility
It is better to get rid of the guarantee immediately if the borrower has a bad credit history.
Anyone who plans to assume obligations for the repayment of another’s loan should know not only their future duties, but also their rights. After all, one person will pay the borrowed funds, and all participants of the credit transaction will be responsible for these actions.
Article in topic : What you should pay attention to when concluding a loan agreement
Before you sign a loan guarantee agreement, you need to check with the borrower about his current financial condition. In addition, you should find out the status of the applicant’s loan history in order to get rid of possible problems. The guarantor has the full right to require the provision of a document confirming the size of the salary of the borrower.
If the amount of the monthly income of the latter is clearly not in line with the size of the regular payment for the loan being issued, then this is the first sign that the loan will be repaid with violations. The reputation of the borrower speaks first of all about its reliability and responsibility. When the credit history of the borrower contains a lot of information about the facts of his unfair behavior, it is also an occasion to think about how to refuse a loan guarantee.
It would also be nice to ask about the realization of what goal the borrower wants to take out a loan, as well as clarify the terms of the loan agreement.
Certain responsibility of the loan guarantor
The contract of guarantee always states under what circumstances, as well as for what the principal party to this agreement is responsible to the creditor.
At the moment there are two degrees of guarantee responsibility – full, or joint and several, and limited, that is, subsidiary. In the first case, the one who wants to take a loan, and the one who is entrusted for it, take on equal obligations to repay the loan.
Loan processing and payment is, of course, only one of them – the borrower, but both are responsible for the execution of the terms of the contract. If the recipient of borrowed funds allows for the formation of a debt, the lender reminds of the need to repay it both to him and the guarantor. When a contract of guarantee of partial responsibility is concluded, its participant assumes certain specific obligations. And the bank has the right to apply to it only in cases stipulated by this agreement.
It should be noted that regardless of the degree of responsibility of the guarantor, the bank can demand repayment of the debt from it only if the borrower documents the impossibility of repaying the loan.
Cancellation of a guarantee agreement, or How to get off dry
Under current laws of the Russian Federation, a person who has signed a guarantee agreement has every right to terminate it in certain situations.
Firstly, all liabilities lose their power after full payment of the loan by the main party to the transaction. In addition, the responsibility of the guarantor is removed if the bank changes the terms of the loan agreement concerning the obligations of the guarantor of the loan, without notifying it. In such cases, the guarantee agreement is terminated automatically, since the new terms of the main agreement no longer correspond to the content of the first document. The circumstances in which the guarantor may withdraw his obligations, also includes a loan for another person. In addition, this agreement is canceled when the bank does not fulfill its obligations to any party to the credit transaction.
If the financial institution violates the terms of the contract concluded with the guarantor, but at the same time requires the fulfillment of its obligations, it may apply to the court to resolve the issue. If there are reliable facts of a change in the terms of the contract, the court proceedings always end in favor of the one who is filing a lawsuit.