6 Things to know Before Guaranteeing A Loan for Someone

Guaranteeing a loan is a major financial commitment with legal implications. The Bank of Ghana advises considering six key factors before becoming a guarantor. Understand that you are legally responsible for repaying the loan if the borrower defaults, which can affect your credit and financial stability. Assess the borrower’s repayment ability, ensuring they have a stable income. Carefully review the loan agreement to understand the terms and conditions. Avoid guaranteeing a loan based solely on trust—conduct due diligence on the borrower’s financial standing. If uncertain, seek independent legal or financial advice. Acting as a guarantor carries long-term risks, so make an informed decision to protect your financial future.