The Bank of Ghana (BoG) cautions individuals to be cautious about who they act as guarantors for in loans.
As per the Central Bank’s guidance, if the borrower doesn’t fulfill their loan obligation, the guarantor will be obligated to repay the loan along with the accumulated interest. The banking industry regulator, in a statement, also suggests that guarantors thoroughly evaluate the borrower’s ability to repay any credit or loan before providing a guarantee.
“Assess the repayment capabilities of the borrower before guaranteeing any credit facility or loan. Don’t forget that as a guarantor, you will be required to pay back any outstanding loan balance, if the borrower is unable to meet the loan obligation”.
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It warned consumers not to rush to guarantee for borrowers and sign off on the documents but rather obtain and study the loan agreement to ensure that they understand the terms and conditions.
“Do not rush to guarantee for borrowers and sign off on the documents. Obtain and study the loan agreement to ensure that you understand the terms and conditions, and you are comfortable, before committing yourself”.
“Do not only depend on a borrower’s word of mouth or merely the relationship you have with them to guarantee their loan. It is your duty to do due diligence. Remember, the commitment has legal implications”, it added.
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Continuing, the Bank of Ghana also counselled consumers to exercise caution, adding “If in doubt, seek independent legal and financial advice prior to accepting to guarantee a loan”.
