Does guaranteeing a loan for some else affect my credit status?

Discussion in 'General Chat' started by evilgenius, Feb 10, 2009.

  1. evilgenius

    evilgenius
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    Basically my wife behind my back is about to guarantee a loan for a friend who coincidently is using a debt management company. Plus im looking to re-mortgage soon/next year.

    Hows will this affect us?
     
  2. lowmans100

    lowmans100
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    As far as I know as guarantor, you wife will be responsible for the debt if your friend defaults. Very risky if you ask me, the friend can stop paying and the creditor will come after your wife.

    Your wife should ask herself if she would be prepared to give the friend all or part of the value of the loan. If the answer is no then the same answer should be given to being a guarantor.

    I always find it best to keep friends and lending money very far apart.
     
    Last edited: Feb 10, 2009
  3. Mep

    Mep
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    You may also be liable if the 'friend' increases the loan if you don't fix a ceiling on it.
     
  4. mooperman

    mooperman
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    yep, thats it exactly, your freind leaves and they come after your wife for the debt, im not saying that will happen your wifes freind maybe perfectly trustworthy but in my experience ive highlighted the above in bold...
     
  5. mistry

    mistry
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    i guess you also need to consider why your wife's friend is in such a position in the first place....
     
  6. hornydragon

    hornydragon
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    BAd idea especially in these credit short times the bank can quite legitimately reduce your available mortgage by the amount of her "friends" loan if the friend defaults it will effect her credit and if its joint mortgage yours too.

    I dont want to sound mean but what does your wife get from the deal? I would do some serious checking into the "debt management company" as if they require a gaurentee they are earning XX.XX% for virtually zero risk! You and your wife are footing the risk for there profit. She may not have thought of it in those terms. Also if the worst happens can you afford the payments? Or would it put you at risk of loosing your home etc.
     
  7. evilgenius

    evilgenius
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    Her friend said she phoned the loan company and they confirmed it would not be secured against our home. Im a ****ing full time student, i dont work, my wife carries the can for everything.

    I wouldn't guarantee a loan for anyone in my family never mind a friend!!! No i can promise this, by closing time tomorrow this deal will be off because im going to confront her, and whats worse, this is completely uncharacteristic of her of not to tell me, that and she super careful with money.

    I dont get it.
     
  8. Iccz

    Iccz
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    If a loan needs guaranteeing, there's obviously risk involved.

    Speaks for itself really...
     
  9. hornydragon

    hornydragon
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    I wouldn't fly off the handle at your better half on the say so of some faceless people on the internet, but i would ensure you go through the details with her calmly and logically and just make sure she is aware of the situation.
    Which i am sure she is.
     
  10. jassco

    jassco
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    the chances are that if she's going through a debt agency, then the loan will be very expensive. perhaps a compromise would be to take out a loan in your wife's name and lend the friend the money... but make sure there's a written contract agreeing the amount and the interest to be paid back monthly.

    only problem is that this may affect the mortgage as well, but at least it keeps people happy.

    my advice is don't lend large sums of money to friends or family (unless they're immediate)
     
  11. Ian J

    Ian J
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    Guaranteeing a loan for someone else will not affect your credit status as guarantees are not registered anywhere. If the guarantee is ever called upon that probably will be registered with the credit reference agencies.

    If you were to take out a loan to lend it to your friend that would also be registered and could possibly affect your credit rating if it's substantial or if you ever defaulted.
     
  12. IronGiant

    IronGiant
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  13. evilgenius

    evilgenius
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    thanks for all your advice. There will be no compromise as there isnt going to be any guaranteer. Ive told her its not happening. I wouldn't do this for family unless they were in dire straits so im not doing this for some nobody ive met 4-5 times.

    many thanks, but that was very worrying.
     
  14. dakara

    dakara
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    I am very pleased to learn that you are sticking by your guns here.
    Don't change your mind about this. Your wife may be providing the family income at present, but that will change when you have completed your Courses.
    Marriages may be made in Heaven, but far too many of them end up in Hell, and the Road to Hell is paved with Good Intentions gone Bad.
     
  15. KoThreads

    KoThreads
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    I became one for a couple needing a loan, had known them years and everything turned out fine. I wrorried about it from the moment i signed the forms until i knew most of the loan was paid. 18 months later they got into money trouble and ended up divorcing, Imagine what that could have meant for me. I wouldn't do it again, especially now as i could do with one myself.
     
  16. Squiffy

    Squiffy
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    I'm still owed £4500 by my brother for a loan taken out back in 1994 that he walked away from.....

    Would never be a guarantor for anyone again.
     
  17. Phil57

    Phil57
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    :oops: I think you have missed a bit out.................between......"friend can stop paying" and "creditor will come after your wife." ;)
     
  18. IronGiant

    IronGiant
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    It makes perfect sense to me...
     
  19. Phil57

    Phil57
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    What about the bit "the creditor will chase your wife's friend first, before chasing your wife."
     
  20. IronGiant

    IronGiant
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    I think you want want one of the "double entendre" threads, not a sensible one on finance :rolleyes: Can we stay on topic please.

    Dave
     
  21. Phil57

    Phil57
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    :confused:
     
  22. IronGiant

    IronGiant
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    Please explain what you think is missing then, and my apologies if I have misunderstood you.

    Dave
     
  23. Phil57

    Phil57
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    Sorry, I thought my last previous post was clear.
    Its not as simple as what lowmans100 had posted, the friend stops paying and the creditor would go after the OP's wife, surly the creditor would chase the debtor first.
    Correct me if I am wrong.
    Please note I did post originally with a following wink.
     
  24. Steven

    Steven
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    A debtor who is using a debt management company

    lowman's post was pretty succinct so nothing to add
     
  25. Miyazaki

    Miyazaki
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    no no no no no no no!!!!!!

    It will end up with your wife and her being mortal enemies and money down the drain.
     

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