Should You Guarantor A Loan For A Family Member?

in Family-member

 

Let us begin from the top - what would you be accountable for if you were to become a guarantor? Essentially, if your family member fails to meet the loan repayments, then you would have to start making them - it's really that simple. If they can't pay the loan, then it may well become your responsiblity until your family member is able to pay again. This is something that you have to consider carefully. Make sure you can afford the repayments if the worst should happen and also make sure that your relationship with your family member is stable enough to endure it.

So what things should you consider before making the commitment? I would certainly advise that you consider how much trust you have in your family member.... If you are sure that they would never leave the burden of repayments with you, then it may be a safe bet, but think this through thoroughlly - are you sure you know your family member as well as you think or hope you do? If you're sure you do and essentially woulnd't mind making some payments to help them out in bad times then you'd be the perfect guarantor.

Another thing to bear in mind even if the trust is strong is that, your family member may not mean to put you in this situation, but may do not out of choice - they become redundant for example and be unable to make payments. Again this would then be your responsibility to pick up.

A last thing for you to mull over - being a guarantor can be an extremely rewarding experience and so if you do it you could be bringing joy to your family member and even yourself - it always gives a warm feeling inside helping someone in need. However, please be sure that you are happy to enter into an agreement; if your friendship may suffer because your friend can't make repayments and subsequently things are lumped onto you, then it's worth thinking over.

 

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George Thistle has 10 articles online

George writes and researches into alternative finance markets.

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Should You Guarantor A Loan For A Family Member?

This article was published on 2012/05/24