What should I know before co-signing as a guarantor for someone else's loan?

As a guarantor, you become legally responsible for repaying the loan if the primary borrower defaults — this isn't just a formality or a favour with no real consequence; the lender can pursue you directly for the outstanding amount if your relative fails to pay, and this can also affect your own credit profile and financial standing.

Before agreeing, it's worth genuinely and honestly assessing your relative's ability and likely commitment to repay, understanding the full loan terms (amount, tenure, interest rate) you're guaranteeing, and being clear-eyed that your guarantee could remain in effect for the entire loan tenure, potentially several years, during which your own financial flexibility could be constrained.

You should also understand what specifically discharges your guarantee — generally, your liability continues until the loan is fully repaid, and certain changes to the loan terms made without your consent could, in some circumstances, affect your guarantee obligations, which is worth discussing with a lawyer if you have any concerns about the specific terms of the guarantee document you're being asked to sign.