Financial institutions may require guarantees from prospective borrowers to enhance the borrower’s credit standing and enable them to obtain financing.
If someone names you as a guarantor, you are legally bound to pay back the loan or balance there of if the borrower cannot or will not pay.
You must always reject to become a Guarantor. No matter what the banker or the guarantee (the person asked you to sign the guarantor agreement) said. Even the person said he / she will be killed by the loan shark or commit suicide if cannot get the bank loan because you don’t sign and become a guarantor.
Sometime, it is not a guarantor for the bank loan. It could be an agreement.
About 6 years ago, a close friend (now no more) named Ah Keat want to apply for a job in one of the largest furniture manufacturer in Sabah. His job position is Sales Representative for the company. The boss requested him to get a guarantor to sign for his job contract. He called me and begged me to sign so that he can get the job. I help him so I signed it without further investigate what are the risks of signing it.
After about 1 month, another friend of mine who know this Ah Keat told me that this Ah Keat was addicted to slot machine and gambling. Then I told him this Ah Keat asked me to sign as a guarantor for his job contract. Then he immediately advised me to cancel this agreement. I told one of my church member about this issue. The church member also advised me to cancel it and asked me to asked another church member (a lawyer) to help to draft a letter to request to stop being a guarantor for this Ah Keat. So I do so and fax the “legal” letter to Ah Keat’s boss.
The next day, this ah Keat called me and scold me on the phone. He said he was fired because I don’t want to become his guarantor. I told him to find another person to become his guarantor since his social network very wide. He hang up.
Few days later, I heard that his boss lodge a police report against him.
Then after a while, more news about this guy….he borrow money from so and so….and the total amount that he borrowed reached RM300k.
Not long after, the real story finally disclosed.
Actually, when I faxed his boss the letter to request to cancel as a guarantor. His boss started to investigate this Ah Keat. Thats a normal procedure because there must be a reason for someone to stop being a guarantor. Then the boss found out that this Ah Keat had collected large sum of money from the clients but he never submitted to the company. That amount could be RM300k or so. So we guess he must had loss all to the slot machine and gambling. And the money he borrowed from his friends and church members (he had been a Christian since young) total more than RM300k. We estimated about RM500k. However, he didn’t used those money to pay back his boss. He used them to play slot machine in a hope that he can strike jackpot and pay back all his loses.
Then, he ran away and hide. We heard from his ex-wife that the loan shark came to his house everyday. He had borrowed money from more than 20 different loan sharks companies. So they divorce so that the loan sharks will not disturbed her.
We heard that he ran to Papua New Guinea….then Indonesia…then Philippine…then Taiwan…..but sometime I still met him in Kota Kinabalu. Seems like he is hiding but not ran too far away.
What is the story about?
If I never faxed the letter of cancellation, I maybe the one who being sued and asked to paid that RM300k. And I for sure bankrupt as I do not had that amount of money. I’ll be the one who ran away and hide. For your information, I just married not long ago before he asked me to sign to become his guarantor. This also means that my marriage life will be broken too. In a simple word, this Ah Keat will destroy my whole life completely.
Had you understand the risk of become a guarantor? No matter what is your relationship with that person. Family members, close friend or someone you love and trust. Do not become a guarantor no matter what.
Unless you are millionaires who never bother of losing some money…
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