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When you sign as a guarantor for someone’s loan, you are legally responsible if the borrower defaults. Banks can recover the outstanding amount from you, directly affecting your credit score and financial stability.
Agreeing to be a guarantor might look like a simple favor, but it can impact your financial goals such as buying 3BHK Flats in Bhopal. If the borrower fails to repay, you will be held liable. This may affect your eligibility for future loans, credit card approvals, or even home loan applications.
Many times, relatives or friends may request you to become a guarantor. You can politely refuse by explaining the legal and financial implications. Suggest them to explore other financing options instead of involving a guarantor.
If you still want to help, you can assist them in improving their credit score or exploring joint loans. For more official details, check this guide from State Bank of India (SBI) on loan guarantors.
