When a person asks for a loan to the bank, the financial entity takes care that there are third parties with the capacity to financially support the one who is going to be given the monetary facility, and thus return the entire amount granted with their respective interests and any other associated charges.
But, when doing this, there are some terms that tend to be confused, such as: co-signer, guarantors, guarantors and joint and several guarantors.
Perhaps it is not clear to you what each concept means, and that is why today we give you each of the definitions, as explained by the portal of ProUser.
- co-signer: For payment purposes, you contract the same contractual responsibilities as the other debtor.
- Guarantor: This is a third person who, in the event that the debtor defaults on his payments, undertakes to respond.
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The responsibility primary debt is not yours. In fact, in case of non-payment, it cannot be reported in the credit bureaus.
Therefore, before the financial entity requires you to answer for the credit, you must have tried to bring the main debtor up to date.
Depending on their level of commitment, the guarantors may make use of the rights of excussion and division, unless the contract signed with the financial entity expressly states that they waive these prerogatives.
The excursion implies that the collection process must always start with the debtor. While the division makes sure that the guarantor is only responsible for a part of the debt.
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- Guarantor: It is a concept equivalent to that of guarantor. The terms are often used interchangeably to refer to the same person.
- Joint guarantor: It is a guarantor who has not pledged any particular good or asset to be seized in the event that the debtor defaults on the debt, but it is understood that he commits his assets jointly and severally.
If the guarantee of guarantor is a property (house, apartment or land), it becomes a real estate guarantor.
In the event that the guarantee presented by the guarantor is a movable asset (vehicles, machinery, financial certificates, savings accounts…), it is a collateral guarantor.
Always remember to read the contracts and ask the necessary questions to know the level of commitment you assume with the financial institution.
