How to decline a request to act as a loan guarantor
One of the most unpleasant situations you may encounter in your financial life is being asked by a friend to act as a guarantor for his or her loan. How are you even going to say no to that without hurting your friend’s sensibilities? Nothing is required of you except to put your signature on the credit request. Your friend assures you not to worry because he or she can pay the loan anyway and your participation in it is just a formality required by the financial institution. It’s all about trusting him or her.
This makes it extremely difficult. You can’t just tell him you can’t afford to act as a guarantor. No money on your end (at least at this stage). On the other hand, you may also feel uncomfortable expressing your concern that your friend may default on the loan. That would be like telling your friend you don’t trust him. Your friendship might just end at this point. And since you are the one who rejected your friend, the blame is on you as far as your friend is concerned. You may even actually believe it yourself.
Well, the situation is really difficult. However you act, you have a threat hanging in front of you – potentially losing a friendship or your money. You can’t say that you don’t have the money to become a guarantor, and you don’t want to say that you don’t trust him or her to ever repay the loan.
The problem is really more about what you can say to reject 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 get out of the situation of hurting your friend. You want to decline the request and keep the friendship.
How about taking a different route? I suggest you tell your friend that you are a Bible-observing Christian. You believe in the Bible’s financial advice to Christians. And that’s one thing the Bible warns us not to do: to act as a guarantor for a loan or surety for a debt. Then quote the following verses from Proverbs to your friend:
1. My child, * if you have provided security for a friend’s debt
or agreed to guarantee the debt of a stranger-
2. if you are trapped by your agreement
and are taken by what you said-
3. follow my advice and save yourself,
for you have left yourself at the mercy of your friend.
Now swallow your pride;
go and ask for your name to be removed.
4. Don’t put it off; do it now!
Don’t rest until you do.
5. Save yourself like a gazelle fleeing from a hunter,
like a bird escaping from a net.
(Proverbs 6:1-5)
If your friend recognizes you as a true Bible-observing Christian, he or she may not be offended. At least you don’t rattle off a standard rejection line. It comes from the Word of God, and who can say that God is wrong?
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