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What are the different types of bank guarantees? What should a guarantor know? Self-Help

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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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Tags: types of guarantee, guarantee, guarantor

Knowledge Base ID:1203
Last Review:May 6, 2010
Source:BankingInfo

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RELATED CREDIT AND LOANS ISSUES
Guarantees are normally given in favour of the financial institution and it is normally a standard document written with legal terminology. I do not understand them. What do I do?

I have given a loan guarantee and the principal has reduced as a result of regular payments. The borrower has approached the bank for an increase in facilities which is within the amount of the guarantee signed by me. Am I liable for the increased amount?

Does my signature of guarantee have to be witnessed? What should I do if I am not agreeable to some of the terms in the contract of guarantee?

How do I withdraw as a loan guarantor?

Can I agree to be a guarantor for only a specific period of time?

Can I be made a bankrupt in the event that the borrower does not repay his or her loan to the financial institution?


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