In this article we want to illustrate how the bank guarantee works and how to best choose the person who will act as guarantor, or guarantor for the loan, taking responsibility for paying off the debt, should the client not be able to repay the loan. full amount.
In recent times, more and more people are forced to resort to the help of a third person, often a relative or a friend, to obtain a loan: this is especially true for young people who do not have a permanent job, for self-employed or project workers , for the unemployed and for new graduates, who are frequently excluded from most personal loans, for which the paycheck or pension slip must be shown.
In these cases, therefore, the signature of a third guarantor becomes the only way to access funding, but it is not enough for the family member to be available for the practice to take place, as the guarantor must also meet certain requirements, which we will list in next paragraphs.
What is the bank guarantee?
The concept of a surety is very simple: if a client calls on the bank to apply for a loan, but is unable to assure the repayment of the sum, the institution in question may request that a third person take part in the agreement, assuming the responsibility to cover the unpaid sum.
So, within a guaranty, three figures operate:
- the contractor, ie the customer requesting the loan;
- the beneficiary, or the Bank or the Institute, as a creditor;
- the co-obliged, ie the third person who assists the contractor during the repayment phase.
Therefore, if the contractor does not pay what was agreed, the beneficiary can claim against the co-obligor, who in effect becomes responsible for paying the expenses discovered: this means that the Bank can proceed with the seizure and expropriation of the guarantor’s assets , or request the payment of the sum.
For this reason, in order for a person to perform the function of guarantor, he must possess those requisites that make it reliable in the eyes of the Bank, ie he must be able to guarantee the payment of what remains unpaid.
The requirements of a good guarantor
Generally, when one opts for the bank guarantee, the choice falls on relatives or family members: a parent, a brother or an uncle who possesses such assets as to guarantee the repayment of the sum. However, not all guarantors have the same ‘weight’ in the bargaining, and it is therefore important to choose carefully this figure, as it will depend on the conditions – more or less favorable – of the loan.
In general, however, the requirements necessary to fulfill the role of guarantor are:
- Available income → A good guarantor, as required by the banks, should be able to pay the loan installment, therefore it must have a certain liquidity available, calculated by subtracting monthly income from all expenses related to the profession and family maintenance. The more disposable income is high and secure – as in the case of permanent workers or freelancers, provided they are fairly successful – the greater the chances of obtaining a loan with advantageous conditions.
- Heritage → Another aspect, no less important, concerns the patrimony of the chosen person, to whom the first dwelling must be subtracted, naturally: the possession of buildings and land , in this sense, is seen by the Banks, even if the money remains preferable, since the expropriation of assets involves much longer times, in addition to a series of judicial and bureaucratic expenses.
- Financial reliability → If the person has already repaid one or more debts, thus demonstrating their seriousness, the chances of obtaining a good treatment will, certainly, be greater: the repayment phase, however, must already have been completed, since any financing in course will negatively weigh on its credibility. This means that a relative who has already accepted to play the role of guarantor for a child, can hardly do the same for another.
- Age → The older the person is, the fewer the chances that he will be involved in funding will be: pensioners over 75 or 80 are often excluded from such negotiations, unless they choose to sign a contract. additional insurance coverage. The perfect guarantor, however, should not exceed seventy years of age, before the end of the settlement plan.
Full or partial guarantee?
The guarantee, however, does not necessarily imply the entire reimbursement of expenses by the guarantor, but can be considered as partial, depending on the agreements made in the contract: if the joint guarantee involves the assumption of total risk, and therefore the obligation to repay the entire sum, regardless of how much paid by the customer with the first installments, the one with the benefit of enforcement involves the balance of the only expenses discovered; finally, the partial guarantee obliges the guarantor to reimburse a predetermined percentage.
The advantages of the surety
The guarantee entails numerous advantages for the client, including the possibility of obtaining the necessary sum more quickly and extracting more favorable terms from the Bank, by virtue of the best guarantees offered; the benefits, however, do not end here, because they include:
- greater serenity during the repayment period;
- fixed or reduced interest rate ;
- coverage in the event of dismissal or accident .
However, involving a third person can be unpleasant for various reasons (personal tensions, disputes during the repayment phase etc.), so it is advisable to reflect well before choosing the guarantor and to resort to this mode only when there are no alternatives available.
In this regard, we remind you that, for young people who need financial help to start their own business, there are many subsidized or non-repayable loans , which leave more autonomy in managing the amount, even though they present very advantageous conditions.