The so-called surety is more and more frequent with payday loans. What is it about when it is used and what are the consequences?
Companies that give so-called payday loans, i.e. quick loans, grow like mushrooms in Poland. Sudden illness, the need to repay financial arrears or other obligations, investment opportunity – a situation where we will need cash for now, can happen to all of us. The procedures for granting loans by the bank are lengthy and in many cases burdened with numerous and complicated formalities. This, in turn, means that many people are choosing a faster and in most cases low-loan loans.
In Polish law, we have regulated many forms of securing financial liabilities. Starting with a promissory note, voluntary submission to enforcement or transfer of ownership as security. However, surety arouses the most emotions. In the past this method was used only by banks, now it is used by non-bank institutions. Uncertainty about the guarantee results from a lack of knowledge, but also the specific nature of this form. This is a very risky step, especially for a person who becomes a so-called resident. However, you can reduce the risk of consequences of a surety.
Guarantee of payday loans
To expand on the subject of surety with a momentary pay, it is worth answering a few questions. First of all, what is the guarantee mentioned above? In short, this is a form of collateral for the payment of debts, we are talking here about both the entire liability and a specific amount of debt. The surety is in a sense a contract. The fact that we have guaranteed the loan will also be noted in the Credit Information Bureau. Currently, loans are increasingly granted online, e.g. via mobile applications. The client does not have to worry about big formalities, or even guaranteeing his payday loan. However, the case we are writing about does not apply to all loans. Additional security is required.
Who can vouch?
A person who decides to become a guarantor is colloquially referred to as a giraffe. Its function consists, as has already been mentioned, in securing the financial liability of another person. It must pay all or part of the claim if the person who took out the loan fails to fulfill his obligation. The guarantor’s situation, regulated by law in the Civil Code, looks like he can only pursue his claims against the debtor. Who can become a resident? First of all, it is worth emphasizing that every natural person who, of course, has so much financial capacity that he is able to secure the borrower’s potential debt. It is of course about her ability to take out a loan or a loan. For non-bank institutions, this is obviously much less complicated. By the way, about how to increase your credit chances, we write HERE .
Credit or payday loan guarantees – advantages
The pledges of the surety can be found on both sides of the barricade. The institution or company that grants us the loan is certain that if we don’t have the means to settle our obligations, a resident will do it for us. The borrower, in turn, thanks to this security, has a chance to receive a higher amount, reaching even – with quick loans, without unnecessary formalities – several thousand zlotys. In many cases, a surety is even the only option for a person with low creditworthiness to be able to get a loan.
Payday loan – consequences
One of the most important is that we may have a problem with our own commitments. In a situation where we vouch for someone with our own assets, we cease to be 100% financially reliable for the bank. So if we are forced to take a credit or loan, we may have a big problem with it. It’s worth reading one of our older entries about obstacles to getting a loan. The text can be found HERE . Our data appear in BIK ( Here we explain how to check if we are in the Credit Information Bureau database). For the bank, it is clear information that if the borrower, for whom we have guaranteed, does not pay the installments, such an obligation will meet us. This fact reduces or reduces our credit standing at all.
Exceptions to the rule
However, not all guarantors have to pay the borrower’s debt if he or she avoids paying it off. It all depends on the content of the contract we have signed. It is worth to read its terms carefully, as it defines in a sense the scope of our responsibility. Of course, it is also important to agree the matter with the borrower for whom we guarantee. In the Polish legal system there is the so-called freedom to conclude contracts, therefore it is possible to modify each of them, change certain provisions. You can start negotiations, try to arrange, for example, a specific maximum amount for which we repay, or specify the period of our guarantee. With the latter, the point is that we can include a clause in the contract that we are responsible for settling our obligations only up to a strictly specified date. After him, all responsibility lies only with the borrower.
What else is worth taking care of?
For the sake of peace you can immediately determine how we will be informed about the need to settle the borrower’s obligations. It may turn out that we will not know about it and the process of calculating interest will start. It is worth trying to make an appointment with the institution granting the loan, as well as with the borrower, that we are responsible only for the amount, and not for interest or additional debt collection costs, for example. One of the good moves on our part will be to make sure that the bank or company is the first to try to use all available means so that the borrower will pay the debts, and only then we will have to do it. It may turn out that the person taking out the loan still has property in the form of real estate, which can be valued and auctioned. Only when it is not enough to cover the debt will they contact the guarantors.
Guarantee or not?
Opinions on this are obviously divided. Everything depends on the context, however. Many times it happens that someone from our family takes a loan. Then, fearing the consequences of performing the function of a giraffe, we have a dilemma whether to help. The surety gives many possibilities to the borrower, but at the same time brings a lot of danger to us. Before deciding on such a move, for your own good, you should know the subject thoroughly. A resident must be fully aware of the consequences that may face him. It can be added that more and more companies are adding loans without certificates and a guarantee obligation to their offer.