The Bank of Ghana is cautioning Ghanaians to be wary of guarantee loans for any and everyone without first assessing the capabilities of the borrower to repay.
According to the Central Bank, by law, the guarantor will be compelled to repay the loan with accrued interest if the borrower fails to honour their obligation.
In a notice, the banking sector regulator also advised guarantors to assess the repayment capabilities of the borrower before guaranteeing any credit facility or loan.
“Assess the repayment capabilities of the borrower before guaranteeing any credit facility or loan. Don’t forget that as a guarantor, you will be required to pay back any outstanding loan balance, if the borrower is unable to meet the loan obligation”.
The BoG also urged potential guarantors to carefully study the loan agreement to ensure that they understand the terms and conditions before appending their signature to it.
“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 notice added.
Continuing, the Bank of Ghana also counselled consumers to exercise caution, adding “If in doubt, seek independent legal and financial advice prior to accepting to guarantee a loan”.