Loan Guarantor: Your child took an education loan and you became the guarantor, what are the advantages and disadvantages of this..

With the start of the new session, the admission process for children has also begun. Nowadays, the fees for higher education and professional courses have become so expensive that it is not easy for the common man to pay them. Therefore, most people also have to take an education loan for their children's higher education. Everyone knows that the education loan will be available in the name of the child and the parents have to become its guarantor. In such a situation, it is important to know what effect it will have if you become a guarantor for the child's education loan.

First of all, let us understand what it means to become a guarantor of a loan. Since the child taking a loan for higher education does not have any income of his own, the bank gives the loan considering his better future, but the risk is also very high. Considering this risk, the bank makes his parents, who have a fixed income, the guarantor of the loan. The responsibility of the guarantor is that if the loan taker does not repay it, then the guarantor will have to compensate for it.

Benefits of becoming a guarantor
The biggest advantage of becoming a guarantor of a child's education loan is that after this the bank easily gives the loan to your child. With its help, the child lays the foundation of his future and becomes a successful person in life by completing higher education. With this amount of loan, he can pay his fees as well as bear the expenses of living and eating. The second advantage is that by being a guarantor, the risk of the bank is reduced, due to which they can be ready to give education loans at a lower interest rate.

Risks of becoming a guarantor

The biggest risk is that if the child taking the education loan does not return the money to the bank, then the bank will compensate for it by recovering it from you.

If the student does not repay the loan, it will also affect the CIBIL score of his guarantor and your CIBIL score can deteriorate without your fault.

In case of a poor CIBIL or credit score, the loan eligibility of the guarantor is also affected. Therefore, in the future when you go to take a home, auto or personal loan, it will also affect that.

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