By Admin 
Loan News: Be it relatives or friends, both are a source of support in difficult times. Saying ‘no’ to loved ones in times of financial crunch makes one feel uncomfortable. It is possible that a friend may need immediate help during a difficult time in business. It is possible that a brother or sister may ask for financial help for some time. A relative may ask you to be a guarantor for a loan because ‘it’s just a formality’ and emotional support often feels like the right thing to do.
But in personal relationships, money matters can get complicated very quickly, because while helping someone out once in a while may not be a problem, repeatedly lending money or guaranteeing a loan without fully understanding the risks can quietly harm your own financial stability.
Why is it risky to be a guarantor?
One of the biggest misconceptions among people, knowingly or unknowingly, is about becoming a loan guarantor. Many people think that their role is only for show. However, it is not like that. When you guarantee someone’s loan, you legally assume the responsibility to repay the loan if the original borrower is unable to repay the loan. If the borrower does not repay the loan, delays payment or does not settle the loan properly, the lender can approach the guarantor to recover the money.
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Not only this, a guaranteed loan can also affect the credit profile of the guarantor and his ability to take a loan in future. This is why financial planners repeatedly advise people to avoid signing guarantee documents due to emotional compulsion. Because this responsibility is very serious both legally and financially.
There is nothing wrong in helping financially
Of course, this does not mean that people should never help their close ones financially. It is common among family and friends to support each other in difficult times. But financial planners stress that such help should be provided within clear limits and with full awareness of the risks involved.
An important thing is whether you can help without harming your financial situation. The second thing is whether the repayment, timelines and responsibilities are discussed openly or are these avoided due to emotions, because often ambiguity harms both relationships and financial condition simultaneously.
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