What are the different types of bank guarantees? What should a guarantor know?
A loan can be guaranteed by one or more guarantors. However, this does not mean that the liabilities of the guarantors are shared equally amongst themselves.
The financial institution has the right to recover the debt wholly or partially from any of the guarantors.
- Joint Guarantee
Under a joint guarantee, upon the death of one of the guarantors,
the obligations under the guarantee passes to the surviving guarantors.
- Joint and Several Guarantee
Under a joint and several guarantee, upon the death of one of the guarantors, the estate of the deceased guarantor will remain liable under the guarantee together with the other guarantors.
Reprinted with permission from BankingInfo (A Consumer Education Programme)
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