First advice, don't co-guarantee loans. Don't be surety for someone else. Even if it's someone you know. Hey, even if he's your good friend, or even your close relative! Unless... you really want to help and you're willing to LOSE or GIVE AWAY the whole amount that you are guaranteeing. Yes, lose or give away the whole amount.
Your hard-earned money, don't give it away. Don't co-guarantee loans.
"Isn't that rather harsh treatment of someone you know to turn down a request for help?", you might say. Maybe. In a way that could be true. But... I'm sure you'll regret it fully and completely if you end up having to pay off a loan you didn't make, a loan you didn't benefit from, and you weren't prepared or willing to give away the money! And for the one who ran away with the money, leaving you to pay off the loan all by your lonesome self, now that person and what he did are truly harsh! So is it harsh or inconsiderate for you to protect your own interests? No. In the end, it is only sound financial stewardship to resist being surety for someone else, to intentionally avoid being a co-guarantor.
Does this kind of thing really happen? Would people really ask you to co-guarantee loans? YES! I have numerous personal experiences and know people first hand who have sufferred, so I can fully attest to this. Here are real examples.
Example 1. The New Guy is asked to guarantee loans. As a young manager and new to the company, I was approached by a manufacturing plant personnel that I didn't even really know, and kindly asked if I could sign a form to help him get a loan from the company Savings and Loan Cooperative. "Just a formality" and "everyone does it" he said. He's made loans before and paid them off, and the one who normally co-signs his loans has already signed for someone else, so he just needs someone else to sign for him now. It all sounded pretty simple. But knowing the principle of financial stewardship on not co-signing loans, i resisted the perceived peer pressure and I just kindly declined and said I don't do that mind of thing.
A similar incident happened to me a few weeks after, with someone else making the request. Again I had to resist the perceived pressure and declined. Once I had established myself as someone who doesn't co-sign, the request stopped and people didn't approach me in this anymore.
Example 2. Request from an officer, so it's a "safe loan". A friend in that company guaranteed a loan made by an officer of the Worker's Union. It was a "safe" loan. The officer wouldn't leave the company, my friend thought. And the officer was a friend. But unknown to my friend, the officer was already having problems with the company management in the area of insubordination, and when the officer was guilty of an infraction of a major company rule, the officer was booted out. This left my friend with the responsibility to pay off the loan, a significant amount.
Example 3. Co-guaranteeing loans of friends, just being "nice" to them. I have many friends who have suffered from not knowing or practicing this financial advice of not co-making loans. One is a Christian in her office whom people would go to for help and advice, and for co-making loans. She had t had problems until one time two people who had loans saw guaranteed left the company. The loan amount was many times her monthly salary. She had to pay off the loan for over a year, and then she learned her lesson.
Another friend was a manager with dozens of staff. Again a Christian who people would turn to, even his staff, for advise on problems. And also on loans. One staff with a loan left the company to work outside the country, and that left my friend responsible to pay up. Again, the amount was in the range of P50k to P60k (approx. USD 1,500), so it's a big nuisance and heartbreaking to pay. Again. Payment was in the form of salary deductions over many months. So sad. But my friend learned his lesson.
Two very recent examples are from my last company. They each signed to co-guarantee loans from the same person, not knowing that each had already agreed to be surety on separate loan. The friend they were helping, actually was having a build-up of issues with the company - basically misusing company assets, and was eventually found out and booted, leaving my two friends with the sorry responsibility of paying loans they didn't benefit from.
Let me also say that as a senior manager and a director in a company, I have been the chairman or vice-chairman of the employees credit and loan cooperative for 5 years, managing over P44MM (USD 1MM) in funds. And so I know first hand how common it is for people to default on loan payments, leaving the co-maker responsible. So don't get caught off guard!
In my next post, I will talk about approaches to get out of being a loan co-maker.
If you've had bad experiences with being a co-maker, tell us about it so we can all learn. I'd love to hear your stories.
If you have topics you want me to cover, just enter a post and I'll do my best to cover that topic.
Bye for now!
- Posted using BlogPress from my iPad
Your hard-earned money, don't give it away. Don't co-guarantee loans.
"Isn't that rather harsh treatment of someone you know to turn down a request for help?", you might say. Maybe. In a way that could be true. But... I'm sure you'll regret it fully and completely if you end up having to pay off a loan you didn't make, a loan you didn't benefit from, and you weren't prepared or willing to give away the money! And for the one who ran away with the money, leaving you to pay off the loan all by your lonesome self, now that person and what he did are truly harsh! So is it harsh or inconsiderate for you to protect your own interests? No. In the end, it is only sound financial stewardship to resist being surety for someone else, to intentionally avoid being a co-guarantor.
Does this kind of thing really happen? Would people really ask you to co-guarantee loans? YES! I have numerous personal experiences and know people first hand who have sufferred, so I can fully attest to this. Here are real examples.
Example 1. The New Guy is asked to guarantee loans. As a young manager and new to the company, I was approached by a manufacturing plant personnel that I didn't even really know, and kindly asked if I could sign a form to help him get a loan from the company Savings and Loan Cooperative. "Just a formality" and "everyone does it" he said. He's made loans before and paid them off, and the one who normally co-signs his loans has already signed for someone else, so he just needs someone else to sign for him now. It all sounded pretty simple. But knowing the principle of financial stewardship on not co-signing loans, i resisted the perceived peer pressure and I just kindly declined and said I don't do that mind of thing.
A similar incident happened to me a few weeks after, with someone else making the request. Again I had to resist the perceived pressure and declined. Once I had established myself as someone who doesn't co-sign, the request stopped and people didn't approach me in this anymore.
Example 2. Request from an officer, so it's a "safe loan". A friend in that company guaranteed a loan made by an officer of the Worker's Union. It was a "safe" loan. The officer wouldn't leave the company, my friend thought. And the officer was a friend. But unknown to my friend, the officer was already having problems with the company management in the area of insubordination, and when the officer was guilty of an infraction of a major company rule, the officer was booted out. This left my friend with the responsibility to pay off the loan, a significant amount.
Example 3. Co-guaranteeing loans of friends, just being "nice" to them. I have many friends who have suffered from not knowing or practicing this financial advice of not co-making loans. One is a Christian in her office whom people would go to for help and advice, and for co-making loans. She had t had problems until one time two people who had loans saw guaranteed left the company. The loan amount was many times her monthly salary. She had to pay off the loan for over a year, and then she learned her lesson.
Another friend was a manager with dozens of staff. Again a Christian who people would turn to, even his staff, for advise on problems. And also on loans. One staff with a loan left the company to work outside the country, and that left my friend responsible to pay up. Again, the amount was in the range of P50k to P60k (approx. USD 1,500), so it's a big nuisance and heartbreaking to pay. Again. Payment was in the form of salary deductions over many months. So sad. But my friend learned his lesson.
Two very recent examples are from my last company. They each signed to co-guarantee loans from the same person, not knowing that each had already agreed to be surety on separate loan. The friend they were helping, actually was having a build-up of issues with the company - basically misusing company assets, and was eventually found out and booted, leaving my two friends with the sorry responsibility of paying loans they didn't benefit from.
Let me also say that as a senior manager and a director in a company, I have been the chairman or vice-chairman of the employees credit and loan cooperative for 5 years, managing over P44MM (USD 1MM) in funds. And so I know first hand how common it is for people to default on loan payments, leaving the co-maker responsible. So don't get caught off guard!
In my next post, I will talk about approaches to get out of being a loan co-maker.
If you've had bad experiences with being a co-maker, tell us about it so we can all learn. I'd love to hear your stories.
If you have topics you want me to cover, just enter a post and I'll do my best to cover that topic.
Bye for now!
- Posted using BlogPress from my iPad
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