Turning a guarantor may impact my capability to raise loan for oneself


I have a question and would like you to respond .
My Uncle is taking a home loan from a bank and he has asked me to be a guarantor. So before being a guarantor I had few question :

  1. Turning a guarantor may impact my capability to raise loan for myself ?
    For example,I am eligible for 50 lakh loan based on my income and if I want a loan of Rs 50 lakhs only but I am a guarantor for my uncle for Rs 40 lakhs . So the amount that bank will sanction me is of Rs 10 lakh [ 50 lakh(my eligible) - 40 lakh (guarantor)= 10 lakh] ? or 50 lakh only ? The EMI is not going from my account .

  2. If my uncle does late payment on EMI say once or twice , will that affect my cibil score as well ?

Thanks in advance and waiting for your reply.


Any default on the loan on which you stand as a guarantor will reflect in your credit score poorly. Your credit score can fall even if you are doing all financial dealings in the right manner but the loan borrower for which you are a guarantor is defaulting periodically. 1-2 delayed EMIs may not be a big problem as payments delayed or missed for a period of less than 90 days are considered minor defaults by CIBIL. So CIBIL score does take a negative hit but the effect is temporary.


Hi Vijay,
Being a guarantor will have an impact on your eligibility for a loan. Banks consider both the loans that you pay as well as the loans that you have stood guarantee for when determining the loan amount that you are eligible for. Usually, they take into account only the outstanding amount of the loan. So, if the loan granted was Rs. 40 lakhs and the outstanding is only Rs. 30 lakhs, they will consider the latter. Also, late payments or defaults by the person who took the loan you guaranteed will have an impact on your Credit Score. That is why you need to be careful when you guarantee a loan.

BB Expert