Financial institutions may require guarantees from prospective borrowers to enhance the borrower’s credit standing and enable them to obtain financing.
If someone names you as a guarantor, you are legally bound to pay back the loan or balance there of if the borrower cannot or will not pay.
What must you remember as guarantor?
- Read and understand the nature of the guarantee. Most people willingly sign on as a guarantor without understanding the impacts on them.
- Check and ensure the guarantee is subject to the laws of Malaysia.
- Be wary about giving a copy of your identification to anyone other than the financial institution or your lawyers.
- Do not sign a blank or partially filled document, or if you do not have a financial, business or moral interest in the transaction.
- Do not become a guarantor to someone whom you have doubts about their ability or integrity.
- Ensure that you are aware of your liabilities in the event that variations are made to the terms and conditions of the loan.