A close friend asks you to become a guarantor for his loan. Because the two of you have known each other for many years, you tell him it shoud not be a problem. But do you sign it immediately? The general wisdom is NO. Standing as a loan guarantor is not like recommending your freind for a job. If your freind fails to repay his loan, the loans collector will come after you. So, it pays to be cautious.
Having more than one gurantor for a loan does not necessarily mean your obligations get lighter. This is because the liabilities of a joint-guarantor may not be shared equally. In such case, the bank may recover the debt fully or partially from any of the guarantors.
Basically, there are two types of guarantees. Under a joint guarantee, the obligation of a guarantor who has passed away will shift to the other guarantors who are still alive. A joint and several guarantee meanwhile means that the obligation of a guarantor who has passed away remain with his estate.
Important things to remember;
1. Read and understand what you are getting in for
2. Check and ensure the guarantee is subject to the lawsof malaysia.
3. Be careful about people wanting to copy your IC.
4. Do not sign a blank or partially filled document.
5. Sometimes the term of loan changes, be sure you are updated if this happens.
6. Don't become a guarantor unless you can trust that someone's ability and integrity.
Right as a guarantor;
1. Obtain a copy of the guarantee letter or contract and any other documents connected with the loan.
2. Go ask a lawyer first before signing.
3. Get information on any outstanding loans of the borrower.
4. Be idemnified by the borrowe if you have to make any payments to the lending bank.
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