Advice needed re: going as guarantor for a friend

Magsnoodle

Hi

So tonight I need some advice regarding an issue I have. Three years ago I went as guarantor for a friend for a loan at an extortionate rate and up until now although we have had some hiccups it has been ok. This was until I had a phone call from the company TFL to say she had missed two payments and refused to answer her phone or answer e mails to them. I finally got her to contact me and I agreed to pay the two months for her with a loose arrangement of being repaid. It wasn't the end of the world though as I always knew there was a risk of her not paying..... But the deal was that she would contact me if in trouble and at least I know about it and can budget accordingly if I have to pay the payment.

So my dilemma is what do I do now? Should I just forget about it and assume that I might need to pay the loan from now on for the next two years (again I always knew this might be the issue) or should I write to her to ask her how she is and what the next steps will be - I am assuming that she is deep in the doo doo and needs support rather than just ignoring it? I will be more tactful than I am now. Writing is my way forward rather than trying to text or phone her as she can ignore them as she always does????

HELP please but please don't judge - there were lots of reasons for my decision - and partly because someone helped me out in a crisis as a 20 year old so it gave me a chance to repay the favour.

Thank you

xxxxx

[Deleted User]

You need to talk to her.

And start saving.

Linus2864

To an observer (ie me), it appears as though she is dropping out of contact with you. It is also possible that she may be ashamed of her financial situation or burying her head in the sand.


Whatever the reason, it is likely she will default on the payments in which case the loan company will come for you.


You can look at your budgeting and put away the monthly payments each month in expectation that you will need to make the payments, or you can take out a loan in your own name at a much lower rate and pay off the original guarantor loan.


However you will need to calculate how better off you will be by comparing APRs and redemption charges to make sure it is worthwhile (it probably will be).


You might want to post your current APR, monthly payments and outstanding amount so others can advise?


Hope this helps


L

jonesMUFCforever

Get a loan now at a decent rate and pay this expensive loan off.

badmemory

You may not feel this, but it strikes me that you have struck lucky on 2 counts. Firstly, that the person whose loan you have guaranteed has actually paid for 3 years without a problem, some have barely paid the first payment.

Secondly, you have been notified after only 2 months. Some have been 6 or more months with charges adding up astronomically.

As JonesMUFC says, you should be able to get a loan on much better terms. So do that and hope you can recover some from your friend. That way should be a lot cheaper than continuing to pay the original loan.

MEM62

Face to face is the only way I would deal with this. If they are a good enough friend that you would do all this for them then they must be a good enough friend that you can sit down and have an honest conversation with them.

andyfromotley

I would definitely mentally prepare to pay it for the next two years.

Keep in contact with her, its much more difficult to stiff someone who you have to look in the eye.

If it is obvious that she cant or wont pay refinance asap. (it may be that she can manage the reduced payments on your refinanced loan?)

If its the best you can do accept part payment of her, it will ease the burden of paying it. Well done on sang froid in this situation, you knew the situation, its coming to the worst, make the best of it. Good luck.

27col

Also. learn from your mistake.
What incentive do the beneficiaries of guarantor loans have to pay them back?
Answer: Almost none
It's a mug's game for the guarantor.

glennstar

Magsnoodle wrote: »

So my dilemma is what do I do now? Should I just forget about it and assume that I might need to pay the loan from now on for the next two years (again I always knew this might be the issue) or should I write to her to ask her how she is and what the next steps will be...

As hard as it sounds I'd take the view that this is only money, it comes and it goes. You obviously felt enough for your friend to help her at the time and you should probably be thankful that she has paid as much as she has.

The thing I would be more interested in, if I were you, is why she has slipped off the rails now. If you need to contact her I would suggest you focus on why she is failing to make payment (obviously not in those terms) and how you can assist her with her current situation... without just throwing more money at it, obviously. She appears to be having issues and support, advice and possibly a reality check often goes a long way.

Finally, as the Guarantor I would ensure, as much as you can, that the finance company is now talking to you rather than her. They are not compelled to do so but if she is under duress already then unhelpful badgering at this stage may be compounding the problem.

I hope you both manage to sort it out.

glennstar

27col wrote: »

Also. learn from your mistake.
What incentive do the beneficiaries of guarantor loans have to pay them back?
Answer: Almost none
It's a mug's game for the guarantor.

Nice one 27col! Money perhaps a religion to you?

Marktheshark

jonesMUFCforever wrote: »

Get a loan now at a decent rate and pay this expensive loan off.

This !
Best advice of the thread.