What are the guidelines for a guarantor under the RBI’s guidelines?



What are the guidelines for a guarantor under the RBI’s guidelines?

RBI allows the banks to frame their guidelines for loans that require guarantors and their treatment. As said earlier, this depends on the various factors like creditworthiness of the applicant, his income, employment and residential details. What are the Conditions Under which the Guarantor will have to Pay Back the Loan?

What is a guarantor on a loan application?

Lenders usually ask the borrower to identify the guarantor as a financial or non-financial guarantor. A non-financial guarantor is kept on the records and only acts as an alternate contact for the bank in case the primary applicant cannot be reached.

Does being a guarantor affect your credit score?

Yes, it will. Most banks and financial institutions look at the loan that you are a guarantor for, as a loan that you hold. They will therefore deduct that much amount from your loan eligibility. Also, if the borrower has defaulted on some payments during the course of the loan, this also shows up on the guarantor’s credit history.

Do I need a guarantor for an education loan?

Yes, you might need a guarantor for an education loan. If your loan amount exceeds the INR 4 lakh limit, you may be asked to provide a security to the borrowed loan amount by adding a guarantor to it.