The Bank of Ghana (BoG) has warned consumers to be cautious about who they guarantee loans for.
The Central Bank states that the guarantor will have to repay the loan plus interest if the borrower disregards their obligation.
The banking industry’s regulator also encouraged guarantors in a notification to analyse the borrower’s repayment capacity before guaranteeing any credit facility or loans.
“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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Customers were advised not to rush into signing documents and guarantee borrowers, but to get and carefully read the loan agreement to make sure they are aware of all 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.
The Bank of Ghana also advised customers to be cautious, saying, “If in doubt, seek independent legal and financial advice prior to accepting to guarantee a loan.”
