Insurance Classroom: Proper Understanding of Guarantor Liability Obligations in Guaranteed Loans

A. Correct understanding of the relationship between the borrower and the guarantor

Loan guarantee means that the guarantor guarantees the borrower to return the principal and interest of the loan on time with its own funds and legal assets, and undertakes general guarantee or joint and several liability guarantee. In the commercial bank guarantee loan contract, it is generally agreed that the guarantor assumes joint and several liability, that is, when the borrower fails to return the principal and interest of the guaranteed loan to maturity or the default situation as agreed in the contract, the commercial bank has the right to request the guarantor to return the loan principal and interest and other debts according to law, and can request the guarantor to assume the guarantee liability within the scope of the guarantee.

Second, understand the responsibilities and obligations of the guarantor

Consumers should pay special attention to the guarantee loan contract regarding the responsibilities and obligations of the guarantor, the following points are easily ignored by consumers.

(a) The scope of the guarantor’s guarantee generally includes the principal amount of the loan, interest, penalty interest, compound interest, liquidated damages, damages, etc.

(2) In the joint and several guarantors’ liability, multiple guarantors do not mean that the debt is equally divided, and the commercial bank has the right to choose to recover the debt from all or one of the joint and several guarantors in accordance with the contract.

(3) The death of the borrower does not mean that the guarantor is exempted from liability, and the guarantor has the obligation to repay the borrower’s debt; if the guarantor dies, the guarantor’s estate may still be executed to repay the borrower’s debt.

Third, the guarantee has risks, guarantee must be careful

When consumers provide guarantees for other people’s loans, please pay attention to the following aspects.

First, understand the situation of the loan they are guaranteeing, and make an accurate assessment of their own guarantee ability and risk of debt repayment.

Second, be clear about the borrower’s personal creditworthiness and economic situation, grasp the borrower’s ability to repay, and request the borrower to provide a counter-guarantee if necessary.

Third, when signing the guarantee loan contract, carefully confirm the guarantee mode, guarantee scope, guarantee period and other contents to protect their legitimate rights and interests.

Fourth, under the premise that the guarantee is effective, once the commercial bank is required by law to fulfill the guarantee guarantee responsibility, it should perform in a timely manner to avoid the continued aggravation of the performance responsibility, while recovering from the borrower and other guarantors (if any) according to law to offset their own losses.