As part of its financial literacy campaign on loan guarantees, the Bank of Ghana (BoG) is advising people to proceed with extreme caution before taking on that responsibility.

The BoG advised anyone in doubtful to obtain independent legal and financial counsel before agreeing to guarantee a loan.

“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 central bank said.”

The complete text of BoG Financial Literacy: Guaranteeing a Loan is available below.

A person who agrees to guarantee a loan in the event that the borrower defaults on the loan, that is, if the borrower is unable to repay the loan plus interest, is known as a loan guarantor. Take wary who you lend money to with a guarantee.

If the borrower fails to repay, it is your legal and financial duty as a guarantor to pay back the remaining loan balance.

Examine the borrower’s ability to repay the loan before approving any credit line or credit arrangement. Remember that in the event that the borrower is unable to fulfill the loan requirement, you, as the guarantor, will be responsible for repaying any remaining loan sum.

Take your time approving the paperwork and providing borrowers with a guarantee. Before agreeing, get a copy of the loan agreement and read over it to make sure you are happy with the terms and circumstances.

Don’t rely solely on your friendship with the borrower or on word-of-mouth to secure the loan. You must exercise due diligence. Recall that the promise has legal ramifications.

Proceed with caution! When in doubt, before agreeing to guarantee a debt, get independent legal and financial counsel.

For any enquiries;

Contact the BoG Market Conduct Office @

Tel: 0302665005

0596912354, 0501502270

Email: complaints.office@bog.gov.gh

Location: 7th Floor Cedi House, Accra

Source: Marzuuq Issah | Ghana360news.com