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How To Get Rid Of Your Role As A Guarantor To A Loan?

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It's sometimes so difficult for folks to say "no" as a guarantor to a loan, simply because it could damage a relationship.

Most of the times it becomes an obligation that can carry over for a long time. These days very few loans need a guarantor, especially since even personal loans has an insurance, the premium of which an individual has to bare.

How To Get Rid Of Your Role As A Guarantor To A Loan?
In case a customer defaults the amount is taken care off by the insurance company.
 

In any case, in case you are a guarantor to a loan, and you want to get out of it as guarantor here is what you should do:

Approach the bank with a letter

You can approach the bank directly with a letter stating that you wish to withdraw as a a guarantor. Now, the tricky question is whether the bank will allow you to relinquish your responsibilities. Remember, that you have signed the form and now the onus is on the bank to decide.

If the loan is large and there is a large outstanding amount, chances are bright that the bank may not oblige. However, if the bulk of the amount has been paid without any defaults in the past, the bank might let you go.

Also read Why You Should Never Take A Personal Loan In India

This is purely at the discretion of the bank. You need to make an application to that effect and withdraw. Considering the fact that bad loans in the banking industry are mounting, you should consider yourself lucky, if you are able to wriggle your way out of the situation.

Now, there are many other reasons when you should just walk into the branch and relinquish your role.

In case of default

If you have begun to realize that there are signs of a default and at least one default has happened in the past, you should rush to the bank.

 

Topping up of loans

If an individual whom you have acted as a guarantor for a loan has topped his loan without your consent, it maybe time to act. This would be specially necessary, if he has done so without your consent.

Get another guarantor

If you are looking to get out, you could look for another guarantor. This is specially true if you are planning to take-up a job abroad and you would wish to get out.

Conclusion

Remember, if there is a default for a prolonged period of time the bank will approach you first to make good the amount. Remember, even legally your case is very weak and you need to cough up the amount. And if you default as well, it could damage your CIBIL score.

Also Read How To Understand your Cibil Score here

Being a guarantor is as good as taking the loan yourself. It's extremely important to therefore think before you act.

GoodReturns.in

Read more about: cibil loans personal loans
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