QUESTION: How to assess the risk of acting as a guarantor: a checklist?

Loan guarantee is a serious financial and legal obligation that can significantly impact your life. Before signing the contract, you must carefully evaluate all potential risks. The main principle here is a simple rule: if you are not ready or unable to pay off this loan for another person in case of a force majeure, you must not agree under any circumstances.

For an objective risk assessment, it is recommended to use a special checklist of parameters. Evaluate the borrower's income level and current payment discipline, their official employment, and the stability of their earnings source. It is also important to analyze the size of the monthly payment relative to your own budget and whether you have a financial safety cushion for unforeseen circumstances.

Special attention should be paid to the purpose of the loan and whether the borrower has a detailed action plan in case of job or health loss. You must understand that in the event of delinquencies, the bank will first turn to the guarantor as a joint debtor. At the same time, you will have to sue the primary borrower and ruin your own relationship with them only after paying off someone else's debt.

A balanced approach to guarantees will protect you from unexpected debt pits and bailiffs. Do not yield to emotional persuasion from relatives or friends if mathematical calculations show a high probability of problems with loan repayment.