How to Decline a Request to Act As Loan Guarantor
One of the most difficult situations that you may encounter in your financial life is to be requested by a friend to act as a guarantor for his or her loan. How are you ever going to turn that down without hurting your friend’s sensitivities? There is nothing required on your part except to affix your identifying characteristics on the loan application. Your friend is assuring you not to worry because he or she can pay the loan anyway and your involvement in it is only a formality required by the financial institution. It is all a matter of trusting him or her.
That’s what makes it exceptionally difficult. You cannot just tell him or her that you cannot possibly provide acting as a guarantor. There is no money involved on your part (at the minimum at this point). however, you might also find it awkward to express your apprehension that your friend may default in paying the loan. That would be like telling your friend that you do not trust him or her. Your friendship might just end at that point. And since you’re the one who turned down your friend, the guilt is on you as far as your friend is concerned. You, yourself, might already really believe that.
Well, it is really a difficult situation. Either way you act, you have a threat dangling in front of you – you potentially may lose a friendship or your money. You can’t say you don’t have the money to act as a guarantor and you don’t want to say you don’t trust him or her to ever repay the loan.
The problem really is more on what you can possibly say to turn down the request. As far as you are concerned, it is bad policy to act as a guarantor (and I agree with you). But you want to wriggle out of the situation of possibly hurting your friend. You want to refuse the request and save the friendship.
How about adopting a different route? I suggest telling your friend that you are a Bible-abiding Christian. You believe in the Bible’s financial advice to Christians. And this is one thing the Bible careful us not to do: acting as a loan guarantor or security for a debt. Then quote to your friend the following verses form the Proverbs:
1. My child,* if you have put up security for a friend’s debt
or agreed to guarantee the debt of a stranger-
2. if you have retained yourself by your agreement
and are caught by what you said-
3. follow my advice and save yourself,
for you have placed yourself at your friend’s mercy.
Now swallow your pride;
go and beg to have your name erased.
4. Don’t put it off; do it now!
Don’t rest until you do.
5. Save yourself like a gazelle escaping from a hunter,
like a bird fleeing from a net.
If your friend recognizes you as truly a Bible-abiding Christians, he or she might not be offended. at the minimum your not blurting out a standard rejection line. It comes from the information of God and who could possibly say, God is wrong?