I have been asked by a friend to be a guarantor for a small commercial consolidation loan. He assures me that all he needs is my good credit and income verification since his credit is not all that good, but that his future income and business has the means to cover the loan payments and that I will not be responsible for anything other than the income verification and the good credit. My question is, exactly what are my responsibilities as a guarantor? Should I consult with my attorney and also talk to the bank vice-president before proceeding with this loan?
It is absolutely vital that you not go into this blindly. You are wise to ask and based on the way you asked, you need to look hard at this obligation. It is more than adding your good name, it includes your signature. You're not saying "my friend is a good guy," but you are saying "if he doesn't pay, I will."
As a guarantor, you may be asked to repay the obligation if your friend doesn't. You won't be asked first, because a guarantor's obligation typically follows the borrower and any co-signer, but you'd still be in line and you would have this as a contingent obligation until it is paid or you are released from the debt.
BankingQuestions.com is a free service made possible by the generous support of our advertisers. Advertisers are not responsible for site content. Please help us keep BankingQuestions.com FREE by supporting our advertisers. When you see an ad for a product or service you may have an interest in, click through to learn more.
Accounts
Article
Q&A
Podcast
Video
Blog
Discussions
PDF
Powerpoint
It is absolutely vital that you not go into this blindly. You are wise to ask and based on the way you asked, you need to look hard at this obligation. It is more than adding your good name, it includes your signature. You're not saying "my friend is a good guy," but you are saying "if he doesn't pay, I will."