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What are the do's and don'ts of being a guarantor?

Do's and Don'ts

  • Read and understand the nature of the guarantee. A prospective guarantor must not sign a document that he has not read or sign a document which is in fact a blank form or a partially completed form. A person signing such a document would have no defence in law should he decide to challenge it in the court of law

  • You should seek professional/legal advice on the legal implications of the guarantee before signing

  • Check and ensure that the guarantee is subject to the laws of Malaysia

  • Be wary about giving a photocopy of your identity card or passport to anyone other than the financial institution or the lawyers acting on your behalf

DO NOT sign any guarantee if you:

  • Do not have a financial, business or moral interest in the transaction and are uncertain as to the nature of the transaction

  • Have doubts as to the ability or integrity of the borrower

  • Feel that you are under undue pressure or duress to do so

  • Do not understand the terms of the guarantee and do not have an independent party explaining it to you

  • Believe that you have no capacity to settle the debts of the borrower if he fails to pay

ALWAYS ensure that:

  • The maximum amount to be guaranteed is clearly stipulated and whether it is inclusive of accrued interest

  • You are aware of your liabilities in the event that variations are made to the terms and conditions of the loan

  • In a joint or joint and several guarantee, all the guarantors sign the guarantee

  • The name of the borrower is clearly stated on the guarantee document

  • You seek clarification or explanation on any of the terms of the guarantee, if in doubt. If necessary, seek legal advice before signing


Back to Guarantors' Contents


Reprinted with permission from BankingInfo (A Consumer Education Programme)


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Knowledge Base ID :   1202
Last Reviewed :   May 22, 2014
Source :   BankingInfo
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