If it comes to the question, in which case the guarantor repays the loan, then it is followed by the simplest answer – if the debtor for some reason does not pay the used loan funds. The loan is taken from the guarantor voluntary or by court order. In addition to these unpleasant events, the guarantor risks his credit history, since the irresponsibility of the borrower will directly affect it.
How is the guarantee work in case of failure of payment?
The obligations of the guarantor for the loan involve certain actions in case of any misunderstandings. If a claim has come from the lender to the respondent, he must notify the borrower. Having fulfilled the requirements of a banking institution without notifying the debtor, the guarantor risks receiving claims from the latter that were due to the creditor. Similarly, the borrower is obliged to inform his guarantor of information on the fulfillment of requirements by the bank to the guarantor, if any.
What to do in the case when the bank sued the guarantor of the loan? It is mandatory to request the participation of the debtor in the proceedings. If the guarantor of the loan has fulfilled the obligations of the debtor that have already been fulfilled, but not communicated to the guarantor, the guarantor has the right to demand a refund from the unscrupulous lender or to do the same with the borrower. In any case, you should think twice before agreeing to become someone’s guarantor of the loan at bank institution.
Termination of the guarantee on the loan
The first and main condition for the removal of obligations under the guarantee is its termination for at least one of the reasons:
- full fulfillment of obligations;
- pre-trial decision on compensation to the creditor of losses;
- refinancing for a longer period with other conditions;
- decision on the allocation of debt;
- the death of the borrower;
- termination of the creditor’s activity as a legal entity;
- invalidity of the loan agreement.
In this case, we are talking about an increase in interest rates or a loan term, the postponement of payments on late terms and other conditions, with an increase in the amount of payment that the guarantor should have the right to refuse from its obligations. The responsibility of the guarantor for the loan is terminated in the following cases:
- the final date of performance and the refusal of the lender to accept the execution of the proposal of the borrower and his guarantor;
- reissuance of debt to another person;
- expiration of the guarantee, availability in the contract; if there is a controversial situation.
The most reliable and problem-free way to get the desired loan is to apply for a cash loan online without collateral and with fast approval. Lending companies gives you the opportunity to issue an online request and get a solution for the requested loan. A loan can be calculated for any period using a loan calculator.