Being a guarantor for someone looking to take out a guarantor loan is a big responsibility and like any financial activity, it is something that should be given a lot of thought. It is one thing to say that you know and trust the person but you really need to make sure that you understand the responsibility that will come your way when you agree to be a guarantor.

If you are asking what are the responsibilities of a loan guarantor, the main responsibilities are:

• If the borrower doesn’t make a payment, the responsibility to make the payment falls on the guarantor
• If the borrower goes bankrupt, enters into an IVA or passes away, the responsibility to make all remaining payments falls on the guarantor

These are very important things to be aware of, so a guarantor needs to make sure that they are ready for the possible responsibility they may have to take on.

In an ideal world, there will be no issue or problem with the guarantor and everything will run smoothly. However, we all know that things can come out the blue in life and as a guarantor; you may find yourself facing a lot of bills at short notice.

You need to speak to the person looking to take out a loan

If someone asks you to be a guarantor, you should look to have a conversation with them. You may already know the person well but if you don’t know them that well, or you are not sure what their current level of finances are, you should speak to them, but you should also ask yourself some questions. The top three questions you should ask at the time include:

• Do you trust the borrower to make all of the payments every month and on time?
• Do you think that they are in a position where they can afford the payments?
• Are you in a position where you can make the payments if the borrower fails to?

These are very important questions and you need to make sure that you are happy and comfortable with the answers. If you are not happy with the answers, it is perhaps best that you don’t step up to the role of guarantor for a guarantor loan. This may be upsetting or annoying to your friend or colleague, but it is vital that you think of yourself and the potential damage that could arise if the loan is not paid back properly.