The Bank of Ghana (BoG) has advised financial consumers to be wary of the people they guarantee loans for.
According to the BoG, if a borrower failed to pay back a loan, it was the guarantor who bore the responsibility to pay back the loan.
In a notice by the BoG to advise the public to be cautious about guaranteeing loan for people copied to the Ghanaian Times yesterday, the Central Bank explained, “A loan guarantor is an individual who gives an undertaking or promises to pay a borrower’s debt if the borrower defaults on a loan obligation, that is if the borrower fails or is unable to repay the loan with accrued interest. Be careful who you guarantee a loan for.”
The BoG explained that guarantors had the legal and financial responsibility to repay the outstanding balance on the loan if the borrower failed to do so.
“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,” it said.
The BoG urged consumers not to rush to guarantee for borrowers and sign off on the documents, adding that consumers should obtain and study the loan agreement to ensure that they understood the terms and conditions, and were comfortable, before committing themselves.
“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,” the BoG stated.
The BoG advised consumers to exercise caution, and if they were in doubt, they should seek independent legal and financial advice prior to accepting to guarantee a loan.
BY KINGSLEY ASARE
