Giving Loan_2

Querist : Anonymous (Querist) 09 October 2010 This query is : Resolved
Mr. X is applying for a Personal Loan of Rs. 150000, and his younger brother (Mr.Y) is giving the gurantee for such loan to the bank. So how far Mr. Y is liable for the debt if Mr. X is not paying the Installment in time intentionally. What should.
Is Mr. X should made an agreement to recover the said amt. from Mr. Y.
If Yes. Please provide me the format of the Agreement.

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R.Ranganathan (Expert) 09 October 2010
As a guarantor of the loan Y will be liable to repay the amount in case of failure to pay the dues by X.

Advocate. Arunagiri (Expert) 09 October 2010
The financier is having all such rights to recover money either from X or Y. There is no order of sequence.

B K Raghavendra Rao (Expert) 09 October 2010
Mr. X and Mr. Y are equally liable to repay the personal loan. If Mr. X has not paid the installments, the Bank is at liberty to proceed against either Mr. X or Mr. Y or both.

I do not understand why Mr. X should recover the money from Mr. Y when Mr. X himself has borrowed the amount.

R.Ramachandran (Expert) 09 October 2010
Dear Mr. Rao,
What Anonymous states is, since "Y" would be standing guarantor for "X" against the loan being taken by "X", "Y" would be paying the instalment in case "X" fails to pay.

Therefore what Y seeks to know from the Forum is, whether "Y" can enter into a separate agreement with "X" whereunder "Y" is able to recover later on from "X", whatever amount that "Y" paid as instalment against the loan taken by "X".

Kirti Kar Tripathi (Expert) 10 October 2010
Under the law both borrower and guarantor are equally liable to repay the loan, in case X fail to repay, the bank can proceed against borrowers or guarantor or both. for this purpose no agreement is required between X and Y. Standing of Y as guarantor against the loan taken by X ifself bends him from his liabilty.