What are the eligibility requirements for a guarantor loan?
Guarantor loans have eligibility requirements such as minimum credit scores and income thresholds that the guarantor will have to meet in order to qualify. While the borrower’s credit score might be poor or fair, the guarantor’s credit score should be considerably higher in order to secure the loan.
What is a guarantor and how does it work?
A guarantor is basically someone who is responsible for a borrower’s debts, in the event the borrower can’t pay for it. A guarantor is someone who provides a guarantee for loans (eg: educational loans, hire-purchase and housing loans). Most of the time, guarantors end up becoming the borrower’s family members or friends.
What are the characteristics of a good loan guarantor?
They will have a good credit history and can afford to pay the outstanding balance of missed payments when the borrower cannot. In fact, some banks often require the loan guarantor to be a homeowner, but this isn’t the case across the board. The most important criterion is that the loan guarantor is solvent.
What is the role of a loan guarantor in Philippines?
As per Article 2047 in the Civil Code of the Philippines, a guarantor “binds himself to the creditor to fulfil the obligation of the principal debtor in case the latter should fail to do so.” However, a lot of people don’t sign up to become loan guarantors with the intention to ever pay.