If I have a guarantor, what will happen if I default on my EMIs?

Any bank or financial institution requires a guarantor for the loan approval or disbursal. When you or another person who signs up as a guarantor will hold the responsibility of the loan as a principal borrower.

This article will help you understand the key responsibilities of a guarantor and what the consequence proves in case of default. Also, if you are looking out at an instant personal loan, look no further than Buddy Loan, one of the biggest loan aggregators in India. 

Buddy Loan disburses personal loans at lower interest rates starting at 11.99%p.a., customized EMIs to enhance your credit score.   

The role of guarantor:

If you are likely to pursue the role of a guarantor for your friend who need an instant personal loan at, he earliest, here is what you should know. You are basically giving consent to the lender that you'll be financially backing the borrower in case the borrower defaults.

Not paying your EMIs on time

If your borrower or you as a borrower forget to pay your installment or decide not to pay the loan, it would sole responsibility of the guarantor. If the guarantor fails to pay the outstanding amount, the bank will file criminal proceedings against them

In return, this will have a negative impact on credit rating. It’s obvious that CIBIL keeps track of guarantor and borrowers in case of defaults.

Finally, even if the guarantor has always been prompt with his loan repayments, his rating will still take a hit from the loan he has given consent to gets defaulted.

Does EMI default affect credit score?

Yes, it surely does! Whether you’re a guarantor, co-applicant or a borrower, your credit rating will obviously take a hit if you default your loan repayment. It could include will non-payments, unwanted repayment delays, etc.

Thereby decrease your creditworthiness and your future chances of loan approvals drop dramatically.

Conclusion:   

Sometimes, the banks approve additional loans to the principal borrower or guarantor without any written consent. This means that it naturally goes to guarantors’ pocket who intends to help out. Thus, it is a bold and risky decision to be a guarantor in an unsecured personal loan. One might have to carefully examine the loan requirements and details of the actions in case of default. One should only become a guarantor if the capacity holds safe for complete repayment & intentions of the borrowers.