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Despite risks, there may be times when you want to guarantee a loan. Your child may need a first loan, or a close friend may need help. Before you guarantee a loan, consider this information:
Be sure you can afford to pay loan. If you're asked to pay and can't, you could be sued or your credit rating could be damaged.
Even if you're not asked to repay debt, your liability for loan may keep you from getting other credit because creditors will consider guaranteed loan as one of your obligations.
Before you pledge property to secure loan, such as your car or furniture, make sure you understand consequences. If borrower defaults, you could lose these items.
Ask lender to agree, in writing, to notify you if borrower misses a payment. That will give you time to deal with problem or make back payments without having to repay entire amount immediately.
Make sure you get copies of all important papers, such as loan contract. The lender is not required to give you these papers; you may have to get copies from borrower.
You may freely reprint this article provided author's biography remains intact:
John Mussi is the founder of Direct Online Loans who help UK homeowners find the best available loans via the www.directonlineloans.co.uk website.