I have given a guarantee for a certain loan and the loan principal has reduced as a result of regular payments. The borrower has approached the financial institution for an increase in facilities which is within the amount of the guarantee signed by me. Am I liable for the newly increased amount?
No. If your guarantee is for a specific loan, the extent of your liability on the guarantee will diminish with the amounts paid. If the lender wishes to increase the loan against your guarantee, the financial institution will either have to obtain a fresh guarantee from you or seek your written consent to the continuation of your guarantee for the increased amount. In the case of overdraft facilities, generally, the guarantor will remain liable up to the limit he/she has guaranteed for and any increase of the limit will require the guarantor’s consent.
you are liable for what you have gauranted nothing more or less.some important advice to gaurantor-----in case of car loan while signing as gaurantor please write ---in case of default and/or disposal of vehicle by bank --prior intimation shal be given to the gaurantor