The guarantor may have to repay the loan

Not everyone is aware that becoming a credit guarantor of another person means taking on a full contractual obligation to make payments when the borrower fails to do so.

A study by the Institute of Finance shows that the Latvian population lacks the understanding of guaranteeing liabilities. And, remarkably, it is the people who are late in payment that turns out to be the most willing to be the guarantor of even more distant relatives, friends, colleagues, and acquaintances, sometimes without much thought, saying that they need to help their fellow human beings.

Lenders are increasingly attracting co-borrowers

Lenders are increasingly attracting co-borrowers

Rather than guarantors in recent times, which further underlines the nature of joint commitments. Namely, both the principal borrower and the co-borrower have the same rights and obligations under the contract, so that the guarantor or co-borrower is equally liable for the performance of the obligations under the contract.

“Commitment to a guarantee is a serious decision that requires careful examination of the circumstances as well as an awareness of the potential consequences. Becoming a credit guarantor of another person means entering into a full contractual obligation that includes making payments when the borrower does not make them himself. But it is the part of the company that itself has time-consuming payment difficulties and low financial literacy that also has the greatest lack of understanding of the level of guarantee liability, ”says Evia, an expert at the Will Ladislaw Institute of Finance.

In order to avoid giving yourself a helping hand by agreeing to be a guarantor with your peers, the expert recommends careful consideration of several issues before making a decision.

For what reason does a lender ask for a guarantor?

For what reason does a lender ask for a guarantor?

If this is because the borrower has had, or still has late payments, it is risky and requires careful consideration of the circumstances. The likelihood that the borrower will not make the new commitment on time and that the guarantor will also have to make use of his own funds is much greater. Similarly, when a borrower has insufficient income to borrow the large sum claimed alone. Unless it applies to the same household when credit is being sought for common goals. On the other hand, if, for example, one of the parents is engaged as a guarantor for the processing of a child’s study loan, such a step is considered justified.

What are the terms of the contract? The guarantor, like the borrower, must also be thoroughly acquainted with all the terms and conditions of the contract so that all potential consequences and potential liability, which the guarantor bears in whole or in part, are clear at the time of engagement.

How much total commitment can you make to your income?

How much total commitment can you make to your income?

Becoming a guarantor of another person’s credit can have a significant impact in situations where you want to take out a loan yourself. The amount of guaranteed debt affects your creditworthiness, so it is important to understand how much total debt you can commit to your income so that borrowing does not burden your financial situation.

Will you be able to repay the guaranteed loan? There are absolutely unexpected events in your life, so you should be prepared for a situation where you will have to take over some or all of your payments at the time you make the guarantee, even if the probability seems small at first. Before taking on a guaranteed obligation, you also need to look at your ability to repay these loans in the future.

Are you ready for a long-term commitment? It is not possible to cancel a guarantee agreement when it is signed. Consequently, the opportunity for rethinking is not given unless another guarantor is provided in your place and / or the change is approved by the lender and the borrower agrees to the change.

Reasons for Banks Not Approving Loans – Loans are Issued!

 

The reasons for banks not approving loans are quite relative. Almost everyone needs to get credit in certain periods of their lives. Sometimes there are large and sometimes less credit applications. Taking credit is seen as an urgent solution. But; banks do not always approve loan applications.

I want to take a loan but they do not give the promise is a common situation. There are many reasons why banks may not provide loans to an individual. Because a bank takes the individual under examination as soon as the individual applies for a loan.

Banks approve loans that will guarantee reimbursement while providing loans to individuals. If there is a risk in repayment of the loan to be provided, the bank rejects the loan application. Because the bank wants to secure its credit. Therefore, even a minor roughness after examination may result in the rejection of the loan in question.

At the same time, since banks do not have an obligation to give loans to individuals, the bank is free to not give loans to individuals when it deems unsuitable. The roughness detected by banks is the reason why the sentence that banks do not give credit is repeated frequently.

Reasons for banks not approving loans

Reasons for banks not approving loans

The credit rating is one of the points that banks pay the most attention to their loan applications. The credit rating represents the individual’s financial history. Therefore, the credit rating is a decisive factor for a bank. The individual who says I want to take credit should pay attention to this point. If the credit applicant’s credit score is high and fulfilled under other conditions, the bank may approve the loan application.

The individual must learn the credit rating. For this, credit rating calculation is required. Those with low credit ratings may try some techniques to upgrade their credit ratings. At this point; The most preferred method to increase credit rating is to obtain a credit card. If the credit card is paid regularly in accordance with the calendar, the credit rating of the individual increases in a certain time.

Credit Limit

Credit Limit

Credit line; is a currency given according to the individual’s income. Banks have credit limits. In general, this limit; salary / 2: monthly amount. To clarify this situation, the monthly installment amount of the loan should not exceed half of the person’s salary. Therefore, the individual has to set a credit line suitable for his income and salary. If it sets a limit exceeding this situation and applies, the loan will not be approved.

Irregular Payments History

If the individual has not regularly paid the loans that he has used before and this is followed by the banks because of this situation, this affects the approval process of the loan application. At the same time, this situation is reflected in the person’s credit rating. In addition, those who have delays in credit card payments are under these negative effects.

Document and Document Deficiency

Document and Document Deficiency

In loan applications, all documents and documents requested by the bank in question must be delivered to the bank in full. It is extremely important that all documents related to income and salary are submitted to the bank. At the same time, failure to provide or declare a single document or document seen in detail causes rejection of the loan application.

The existence of another loan that continues to be problematic

Persons may need a second loan while they have an ongoing loan. In these cases, you can apply for a loan. Of course; In such cases, the ongoing loan of the person will be examined. For example; monthly payment amounts of the ongoing loan, whether the individual pays regularly and in accordance with the calendar is examined. If there is a problem or disruption in ongoing loan payments, the bank may not approve the loan.

Credit Registry

Credit Registry

The so-called “Black List” is often heard. If an individual has a legal or administrative track record in the credit registry within this framework, the bank may reject the loan application.

What is the discount and surrender loan? Who is given Check Credit? What are the conditions?

The cash needs of small or large enterprises are constantly maintained in order to survive so that they can continue their business. In order to ensure the continuity of the practices and prevent any problems in the works; The need for cash is always a necessary factor. For the continuity of these works, there is also a government incentive and business owners are offered various facilities with easy payment methods.

Discount / Loan Credit

Discount / Loan Credit

Commercial enterprises, in order to ensure continuity in the sector; The promissory notes or checks they receive for the return of their services and goods are used instead of money. These papers are; It takes place in valuable papers. However, the use of these valuable papers carries several risks.

There are factors such as loss, theft, day duration. For the promissory notes; In order to meet the cash needs in return, the credit value appears in this case. In such cases, banks’ discount credit is used. So, what are the discount credits and lending credits? What are the advantages?

What happens if the payment is not made within the due date?

What happens if the payment is not made within the due date?

Checks or notes are known as valuable papers that are converted from the bank as cash when they expire. Most of the time, cash needs may be experienced and these checks may be requested to be exchanged. Banks offer you various credit options for these valuable papers that are not expired.

Considering the length of this maturity period, the bank will give you cash. In addition, commission and interest are applied to you. In this case, you will have an additional interest and commission in your pocket. At the same time, the amount of the payment, which is included in the legal deductions of KKDF and BSMV, are met.

Interest, Commission and Taxes

The commission will pay back taxes or interest or the person who owns the bill. For subsidiary and discount loans; Although any bank receives commissions or interest, most trading companies often prefer these loans. However, this promissory note is overturned by the bank when the due date comes. In the case of a check, the person responsible for this is not the checker. The person responsible is the owner of the check.

The banks that you want to make transactions, at the end of the checks, monitor the legal transaction and enforcement proceedings by the lawyers in their bodies. It is not possible to make credit records by notary in the transactions belonging to the account in participation and discount loans. In this type of loan, the interest amount is compared to other loan options; it has a lower rate.

Advantages of Discounting Loan Credit

The cash needs and cash exchanges of commercial companies and companies are very important and always needed. Valuable notes that are generally used in commercial field; This cash need may be disrupted in some cases. In addition, the banks that have developed subsidiary and discount credits; these valuable papers meet their customers’ cash needs before they expire.

In return for this; There are deductions such as commission and interest. Checks and promissory notes often disrupt these valuable checks as they disrupt the cycle in business life. Banks; They deduct interest by applying interest to their users based on the length of maturity. The remaining part of these cuts comes to you in cash. This system in question is protected and legally supported.

What is the Difference Between Discount Loan and Participation Loan?

What is the Difference Between Discount Loan and Participation Loan?

Valuable papers that do not expire in the participation and discount credits; It is possible to convert it into cash with the appropriate interest amount. While discount credits are formed as the delivery of the promissory notes to the banks by withdrawing loans instead of the promissory notes; Depending on the bills that do not expire in the participation loans, credit withdrawals occur in places located outside the borders of the municipality. The only difference is; there are municipal boundaries.

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