Tagged Knowledge Base
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What should I know before being a loan guarantor? Why do I need a guarantor for a loan?
Financial institutions may require guarantees to enhance the credit standing of prospective borrowers, thus enabling them to obtain financing. Many people think that a guarantor gives a reference...
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Who can be a guarantor?
Anyone can be a guarantor as long as the person can meet the legal requirements to be a guarantor. However, since a guarantor would be liable to pay the debts of the borrower in the event the...
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What are the rights of a guarantor?
There are certain rights accorded to you as a guarantor before and after signing the contract of guarantee. These include: The right to obtain a copy of the letter of guarantee or contract of...
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What are the liabilities of a guarantor?
More often than not, guarantors willingly sign the contract of guarantee without fully realising the impact it may have in the future. Therefore, it is extremely important for a prospective...
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What are the limitation of actions against guarantors? When will your liabilities as a guarantor be discharged?
Limitation Of Action Against Guarantors Where a guarantee is made payable on demand, a financial institution cannot bring an action against the guarantor until a demand has in fact been made under...
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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...
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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...
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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?
You can request the bank officer to explain the legal implications to you or if you choose to, you can have the guarantee explained to you by your lawyer. Don't sign the guarantee if you are not...
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I've given a loan guarantee and the principal has reduced as a result of regular payments. The borrower 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?
No. If your guarantee is for a specific loan, the extent of your liability on the guarantee will diminish with the amounts paid. If the lender wishes to increase the loan against your guarantee,...
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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?
Yes. Guarantees would normally be signed in the presence of a third party although it is quite common for the financial institution's officer to act as a witness. However, financial institutions...
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