Tuesday, April 23, 2019
Guarantor Loans

Should you ask a Sibling to be a Guarantor for you?

A guarantor loan can be a great way to be able to borrow cash if you do not have a good enough credit rating for any other type of loan. It can mean that you will be able to get money that you need without having to borrow off friends and family or by using other more expensive means. However, if you do take out a guarantor loan you will need to ask someone to be a guarantor for you. They will need to be someone that has a good credit record an dis willing to make any loan repayments that you might not be able to afford. Many people will ask family and it may be that you decide that it will be best to ask one of your siblings.

Advantages

By asking a family member it means that you do not have to tell your friends that you have financial problems, which could be something that you have concerns about. It is not always something that we will want to make public knowledge. Sometimes families can be more forgiving of situations like this and they may already be aware of your situation anyway. Obviously if you are aware of their financial situation you will know whether they are likely to be able to help, but if you do not then you may have to ask them about it.
Even if they cannot help you they are more likely to be understanding and not tell anyone else of your situation. They may even have some helpful advice which could enable you to be able to get the money that you need.

Disadvantages

Sadly there are rather more disadvantages than advantages, as there often are with these things. It is important to make sure that think about whether them helping you like this might have a negative impact on your relationship with them. If you take up the loan and make all the repayments then it is unlikely to impact them at all and therefore there should be no problems with it. However, it is if you miss a repayment that it could become tricky. They will then be expected to make the payment instead and as that is what they have agreed to do, they should not be surprised and should be in a financial situation where they can afford to do this. However, if this happens lots of times then it could get harder for them as it may have a significant impact on what money they can spend. They may also expect you to quickly repay them the money that they have paid on your behalf and you may not be in a situation where you can do this. This could cause problems between you.

It is therefore a good idea to have a chat with them beforehand about what their expectations will be with regards to nay payments that they have to make. Agree on whether you will need to pay them back and when you might be able to do that. Make sure that they are aware that although you will try your best, there is a chance that they will have to make every repayment for you and that you may not be able to repay them very quickly. Although no one will want to think that this will be the case it is best to assume the worst and prepare them and come up with a plan in case this happens. Write down what you have agreed on and then you will have something to refer back to and it should help to prevent you form arguing and falling out over it.

You may even find that you might fall out with other family members over it too. Perhaps your sibling gets your parents or other siblings involved and they put pressure on you about it too. This could lead to all sorts of problems within the family. This is something that no one wants and having a good family relationship can be really important so it is wise to think through the consequences before you start.

Conclusion

So although asking a sibling to be a guarantor may seem like a really good idea, there is the possibility that it may not turn out that well. It is therefore worth thinking it through hard first and then discussing things at length with them before you go ahead. They may really want to help you out and be perfectly happy to pay any repayments that you miss, but you will need to be sure of that and to also to have a written agreement so that you know that you are thinking the same things from the start. Hopefully you will then protect yourself form falling out with them or any other family members.

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