How can a guarantor and a co-applicant help you with an EMI?

How can a guarantor and a co-applicant help you with an EMI?

Availing an instant personal loan isn’t difficult if you are doing so with a joint venture. Be it a guarantor or a co-applicant, we all have help in hand if we learn to ask. But how do a guarantor & a co-applicant differ?

This article clarifies this and also persuades you to choose the wiser options while availing an instant personal loan. Today, Buddy Loan is one of the biggest loan aggregators that has dispensed personal loans with lower interest rates starting at 11.99%p.a., customized EMI options, etc.

However, will a co-applicant or a guarantor ease your burden on repayment or credit score? We shall check that below:

Read more: Make Life Easier With No Charge EMI!

Co-applicant for a personal loan

In order to get a better deal on your personal loan, we avail a co-applicant or a co-borrower. Your loan approval or eligibility increases if your co-applicant has good income & credit score.

The next question is who can be co-borrowers? In most of the scenarios, it is usually the family members, like your spouse or parents. Of course, there are lenders who allow your siblings to be allocated as co-applicants too.

Similarly, of the co-applicant has any bad credit score or bad income proof, the chance of availing a loan is likely low. In here, a default will affect both the scores.

Consequences 

Usually, banks require guarantors before they approve of any personal loans. A guarantor is a person or institution who is liable for the loan as a principal borrower. A guarantor gives the consent to the lender that they will be backing the borrower in case of defaults.

But not every personal loan is a “guarantor” personal loan. Banks and other financial institutions prefer guarantors with good income over Rs. 25000 to qualify for a consent.

A guarantor should be aware of the consequences of the loan default and will bear the responsibility of repayment in case of borrower’s default. A guarantor loan is an unsecured loan whose signature is mandated on the credit agreement.

To remind you so, Buddy Loan disburses all personal loans as unsecured loans, yet with lower interest rates & customised EMI options.

Read more: Make Life Easier With No Charge EMI!

A role of a guarantor if you default on your EMIs:   

Any bank or financial institution requires a guarantor for the loan approval or disbursal. When you or another person who signs up as a guarantor will hold the responsibility of the loan as a principal borrower.

This article will help you understand the key responsibilities of a guarantor and what the consequence proves in case of default. Also, if you are looking out at an instant personal loan, look no further than Buddy Loan, one of the biggest loan aggregators in India.

Buddy Loan disburses personal loans at lower interest rates starting at 11.99%p.a., customized EMIs to enhance your credit score.

The role of guarantor:

If you are likely to pursue the role of a guarantor for your friend who needs an instant personal loan at the earliest, here is what you should know. You are basically giving consent to the lender that you’ll be financially backing the borrower in case the borrower defaults.

Not paying your EMIs on time

If your borrower or you as a borrower forget to pay your instalment or decide not to pay the loan, it would sole responsibility of the guarantor. If the guarantor fails to pay the outstanding amount, the bank will file criminal proceedings against them

In return, this will have a negative impact on credit rating. It’s obvious that CIBIL keeps track of guarantor and borrowers in case of defaults.

Finally, even if the guarantor has always been prompt with his loan repayments, his rating will still take a hit from the loan he has given consent to gets defaulted.

Does EMI default affect credit score?

Yes, it surely does! Whether you’re a guarantor, co-applicant or a borrower, your credit rating will obviously take a hit if you default your loan repayment. It could include will non-payments, unwanted repayment delays, etc.

Thereby decrease your creditworthiness and your future chances of loan approvals drop dramatically.

Read more: Make Life Easier With No Charge EMI!

Applying for a personal loan with a guarantor:

Sometimes, the banks approve additional loans to the principal borrower or guarantor without any written consent. This means that it naturally goes to guarantors’ pocket who intends to help out. Thus, it is a bold and risky decision to be a guarantor in an unsecured personal loan. One might have to carefully examine the loan requirements and details of the actions in case of default. One should only become a guarantor if the capacity holds safe for complete repayment & intentions of the borrowers.

Role of a co-applicant if you default on your EMIs:

Who will not like extra support while applying for an instant personal loan? Especially, if it means to include your spouse too. Co-applicant’s hand makes it easier for the approval of heavy amount loan.

This article will help you understand the key responsibilities of a co-applicant and what the consequence proves in case of default. Also, if you are looking out at an instant personal loan, look no further than Buddy Loan, one of the biggest loan aggregators in India.

Buddy Loan disburses personal loans at lower interest rates starting at 11.99%p.a., customized EMIs to enhance your credit score.

The role of a co-applicant:

Co-applicant is a person who applies along with the applicant from a bank or financial institution. He/ She accepts the equal responsibility of repaying the instalment on time if the borrower doesn’t pay. So, only co-owners can become co-applicants.

In which case, the co-applicants are none other than your spouses or in some cases, parents. However, it doesn’t always have to be the mundane whereas father & son, husband & wife, parents and unmarried daughter too can apply as a co-applicant.

Serves well if you’re availing an instant personal loan for a buying a new home or home refurbishment.

Not paying your EMI on time

Sometimes buying a house of larger value will need a joint money venture. Especially, to meet the eligibility criteria and quick approval. Since the applicant and co-applicant have equal responsibility for the instalment repayment, it is quite necessary for both to know the liability of payments.

A joint loan account is based out on both individuals credit reports. If the applicant loses a chance to repay the EMI on time, the negative credit report will report on your co-applicant. The negative plunge in credit score is unified via a joint loan account.

Does EMI default affect credit score?

Yes, it surely does! Whether you’re a co-applicant or a borrower, your credit rating will obviously take a hit if you default your loan repayment. It could include will non-payments, unwanted repayment delays, etc.

Thereby decrease your creditworthiness and your future chances of loan approvals drop dramatically.

Applying for a personal loan with a co-applicant:

It’s a rule by an application that both the applicant & the co-applicant should ensure paying back the EMIs on a due date regularly. Checking your CIBIL report and score regularly will you understand your credit history and journey.

If your credit report shows a default in one of the EMIs then take measure and apply efforts to improve it before the tenure closes. Maybe, you should enhance before you apply for another loan.

Lastly, your next loan will leave you with a hassle-free journey to own your instant personal loan and your dream home.

Read more: Make Life Easier With No Charge EMI!

Conclusion

Instant Personal loan eligibility is always dependent on you majorly, however, a co-applicant and a guarantor serve as a catalyst & a consent in a loan approval.