Loans with Multiple Guarantors

Goals

To help determine the feasibility of a product idea, understand the regulations surrounding allowing multiple guarantors/cosigners on a single loan.

Early Findings

  • Some sample text we found from a law firm seems to indicate that multiple guarantors are allowed on a loan.
  • Generally, a person can only act as a guarantor on one loan at a time. This is because the lender would be concerned that if multiple loans defaulted at the same time, the guarantor would not be able to pay.
  • An article on loan agreements on the site LegalNature indicates that there can be multiple guarantors on a loan, but each one is subject to the same terms as the borrower. There was no indication that each person would only be responsible for a portion of the loan only.
  • A limited guarantor is a person whose obligation related to the loan is limited either by the amount of time they are responsible or by the amount they are responsible for.
  • There are many types of guarantors and the language of the contract is very important in determining what type of liability the guarantors have. Some examples are a continuing guaranty, limited or unlimited guaranties, guaranty of payment, and guaranty of collection.
  • According to CollegeRaptor, most lenders will only allow one cosigner on a student loan. However, there was no information indicating that multiple cosigners were prohibited by law, just that most banks did not do it.
  • OneMain Financial is one bank that offers cosigned loans. However, we could not find details on whether they allow for multiple guarantors.

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