Guarantor signage - think thrice before you sign

Insolvency is a real problem among our Malaysian Indians. Even more worrying is that those Indians who are declared bankrupt are in the prime of their life. If their bankruptcy status is not addressed, they risk losing their Employer Provident Fund. And, that is not the only concern. Insolvency literally impedes quality life - one can't open bank deposit accounts, can't buy property/vehicle/land, can't travel overseas and, in short, one will be short on financial stability and economic welfare with restricted movement.

While there are various ways you can get blacklisted, one of it is by signing to be a guarantor. I am writing this specifically for Indian girls with boyfriends who have small salaries but big lifestyles. These guys are just fresh out of college and just joined jobs - they have to pay back their PTPTN loan and establish financial stability but due to lack of prudence and vetti bandha (needless pride), they lead the lavish lifestyle they can't afford.

These guys typically take loans from banks to pay for their splurge and since they have nothing solid to offer as a guarantee to the bank, the bank asks them to find a guarantor. And, if they approach you, their gf to sign as a guarantor, there is a number of things you should find out on the downside of being one. In fact, the only upside is you helping your bf girls - apart from that, all of it are the downsides. The risks of being a guarantor are listed in this article.  The most important points though are these:

"Q : Will i be made into bankruptcy if the borrower failed to repay the loan?

A : Yes. If the debt is equal to or more than RM30,000 as defined by the Bankruptcy Act 1967, the financial institution can take bankruptcy action against you to recover the debt.

There are many ways a friendship can be disrupted and being a guarantor for your family member or a friend could be one of them. The gesture of assisting someone in need is definitely comprehensible but there is a limit to everything. Guarantors should know their capability before agreeing to any documents legally. So, it is wise to put in extra thought into this matter."

So, what's the worst case scenario? You will end up paying for the loan you didn't take. And if you fail to pay the loan you guaranteed, you can end up being bankrupt. And, it almost always happens after breakup. Then you will face problems when you marry another guy. Already Indian guys fret so much about a girl's past but not about a guy's past so how you became bankrupt, for whom did you sign as guarantor, all these questions will crop up and make your life a living hell. The guy will be happy, exonerated from the burden while you have to make to and fro trips to bank, negotiate, bear talks about your past and all the heartache compounded by your financial status.

In actuality, being a guarantor is not good for anyone. The bank asks for guarantor because it doesn't have confidence on the loan applicant AND YOU SHOULD NOT TOO. Be selfish and girls, be wary.

Think thrice before signing as guarantor, research on the nitty gritty details of being a guarantor and learn to say NO. No relation is more important than the productivity of your life and the peace of your mind.