In today time, every person takes a loan according to his need, whether it is a large amount or a small amount. But a guarantor is always needed to take a loan. After that, you can easily get a loan. Taking a loan is a big process and many things in it are looked after by the bank or financial institution.
Not everyone becomes a guarantor of a loan. Only if there is a trustworthy person, he takes responsibility for it. Because the loan guarantor also becomes responsible for getting the loan. If the borrower does not repay the loan, then the trouble increases for the guarantor. Let us tell you how…
The money must be paid to the loan guarantor
If you get a loan by making a guarantor to a person and that person fails to repay the loan or refuses it, then trouble arises for you. For this, under Section 128 of the Indian Contract Act, the person taking the loan is a co-applicant with the guarantor.
Unless some separate clauses have been added to the contract. This means that if the borrower has not repaid the outstanding loan and interest amount, then the loan guarantor becomes responsible for repaying the remaining loan amount and interest amount.
What to do in such a case?
First of all, you should become a loan guarantor of a person who is known to you. Therefore, if such a situation comes later, then you can get out of that problem by understanding or talking. If you become the guarantor of a friend loan or a relative loan, keep asking them about the loan from time to time, is he paying its installments on time or not?
If a person is unable to repay the loan, it also keeps the CIBIL score of the loan guarantor poor. After this, the possibility of getting a loan in the future also decreases. The guarantor has the right under the Indian Contract Act to file a case against the borrower and save himself from this situation.