This Is The Biggest Risk To Consider If You're Asked To Be A Loan Guarantor

This Is The Biggest Risk To Consider If You're Asked To Be A Loan GuarantorThis Is The Biggest Risk To Consider If You're Asked To Be A Loan Guarantor

Look before you leap! Know what you're in for before you say yes (or no!)

“Will you be my loan guarantor?”. You probably would freeze if a friend or a family member asked you this question. For one, do you know what the loan guarantor requirements are? And secondly, even if you want to say yes out of the goodness of your heart, do you know all the risks and responsibilities that entail? Here’s everything you need to know before signing those documents or making a decision.


Why do I need to know the loan guarantor requirements?

loan guarantor requirements

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Typically, people who need a loan guarantor usually have a poor credit history. Whether it’s for a personal loan or auto loan, the lending party will decline your application if they feel you aren’t able to make your monthly payments regularly. Having collateral or a guarantor increases your chances of your application getting approved.

After all, a guarantor’s primary responsibility is to pay the principal if the borrower doesn’t. As per Article 2047 in the Civil Code of the Philippines, a guarantor “binds himself to the creditor to fulfil the obligation of the principal debtor in case the latter should fail to do so.” 

loan guarantor requirements

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However, a lot of people don’t sign up to become loan guarantors with the intention to ever pay. It’s usually done to help the lender with their financial situation. Even if you felt like saying yes, it’s important to know what are the loan guarantor requirements.


What are the common loan guarantor requirements?

loan guarantor requirements

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Generally, an appropriate guarantor is between the ages of 18 and 75. They will have a good credit history and can afford to pay the outstanding balance of missed payments when the borrower cannot. In fact, some banks often require the loan guarantor to be a homeowner, but this isn’t the case across the board. 

The most important criterion is that the loan guarantor is solvent. Basically put, their assets are greater than their liabilities, and ultimately they are able to pay when the person who is taking the loan out can’t meet the financial obligation.

The guarantor needs to make missed payments within the agreed time limit, which can be within ten business days of the missed payment. 


Loan guarantor responsibilities and risks everyone should know before signing the documents

loan guarantor requirements

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If there are some doubts, that’s completely natural. After all, you are taking responsibility to pay for someone else’s debt at no benefit to yourself!

It goes without saying that before you agree to any binding contract, you need to consider a few aspects to this arrangement.

There are some factors to consider in the event that the loanee defaults.

You should be aware that missing a payment doesn’t just affect the borrower’s credit score, but it negatively impacts the loan guarantor’s as well! Even if your credit history is good, a succession of missed payments will affect your ability to take out loans in the future. The bottom line is your credit rating is at risk when you are a loan guarantor.

loan guarantor requirements

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If you want to be absolved of future responsibility, you can request a revocation from the agreement. However, this only applies to future debt obligations that aren’t paid. If there is an outstanding balance, a loan guarantor is still required to fulfil the obligation of paying this debt.

It’s common that potential loan guarantors seek legal advice before coming to a conclusion. If anyone asks of you this huge responsibility, make sure to talk it through with all relevant parties before committing.


Knowing the loan guarantor requirements can be crucial before you make a decision. Share with any friends who might be in a similar situation!

Read more articles below:

What Is An OFW Loan And Which Are The Best To Apply For

6 Tips If You’re Planning to Ask Someone to Become Your Loan Guarantor

The Only Guide You’ll Need For All Mandatory Employee Benefits In The Philippines

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Written by

Vinnie Wong