As for Ahmad Al-Baraheem, he takes out SR1,800 from his salary to pay off a bank loan from which he did not receive even a single riyal. There are several other examples in which guarantors who pledged to clear loans of others have been left to pick up the pieces. Normally, a guarantor agrees to clear another person's debt should that person default.
The borrower’s failure to promptly repay the loan puts the guarantor in an awkward position.
Most of these guarantors are either close relatives or friends of the borrowers. These guarantors have become victims simply because they lent a helping hand to their relatives and friends in their hour of need.
It is too late for many guarantors to do anything after discovering that the borrowers they have endorsed are unscrupulous people who have not been sincere in settling their debts.
These borrowers cheat the guarantors by convincing them in the beginning that there will not be any defaulting of loans. However, later they fail to promptly repay the loans and thus put the guarantors in an awkward position, according to a report in Al-Riyadh newspaper.
A number of guarantors told the newspaper that they became victims of cheating by their relatives or friends only because of their earnest desire to extend them some sort of support to fulfill their urgent financial requirements.
Abu Yaaqub said that he acted as a guarantor to a close relative in order to save his reputation in the family.
“Even though I was fully aware of the problems that may arise if he defaulted on his payments, I was forced to pledge as a guarantor in order to avoid any humiliation. I came to know that this borrower spoke in a humiliating way about those who refused to guarantee him,” he said.
“Later, I received frequent reminder calls from the bank concerned saying that the borrower was defaulting on his payments. This put me in a very difficult situation. The bank officials used to make telephone calls to my office. It caused me mental stress, especially when the calls were answered by colleagues every now and then.”
Abdullah Al-Omair, another guarantor, says the fear about the hostile reaction of many borrowers force a large number of people to act as guarantors even though they know they may become victims of cheating. “There were a lot of cases in which such guarantors were falling prey due to the defaulting of their close relatives and friends and thus putting them under the dreadful financial pressures of settling the debts. These people use all tricks to persuade the relatives to guarantee the loan and then they become merciless wolves by deliberately defaulting and thus forcing us to risk the huge burden of settling the debts,” he said.
Many people say that these unscrupulous borrowers lure their victims by putting them under intense pressure in case they refuse to help. Another factor is the absence of an effective law that forces the borrower not to default and thus putting the burden on the shoulders of the guarantor.
Ahmad Al-Salem, a Saudi, recalls that he was quite surprised when one of his relatives started abusing him when he politely refused his request to pledge a guarantee for a loan.
“I never pledged a guarantee for anybody in my life with the full knowledge that I would be the ultimate loser in the deal. I was never bothered about the abusive remarks claiming I was ignoring relatives and supporting unrelated people. Whenever anybody approaches me to pledge a guarantee so they can buy a car in installments, I ask them to register the car in my name, and then they leave me without insisting I become a guarantor,” he said.
The people who seek guarantees to secure a banking loan or finance for a car employ various ploys to convince the guarantor. But after getting the loan, they then fall behind in their repayments.
Ahmad, a bank employee, stated his bitter experience after agreeing to guarantee a friend.
“The friend approached me requesting to become a guarantor to buy a car in installments so he could take care of his ailing mother. His plan was to sell the car in order to collect the money for her operation,” he said.
I could not sleep after listening to my friend. So I made up my mind to guarantee him. But later, to my utter shock, I learned that his mother was not all suffering from any ailment and that he defaulted on his payments. Therefore, I am now shouldering the burden of repaying the loan.”
He urged others to be vigilant and cautious against guaranteeing any relatives or friends.
Another employee, Faisal Al-Khalifa, became a guarantor for a colleague so he could buy a luxurious car. “After receiving the car, the colleague resigned the job and left the place. He changed his address and there was no way to contact him. Eventually, as a guarantor, I was forced to settle his debts, which amounted to about SR80,000,” he said.
A large number of victims are of the view that this system of guaranteeing loans has become the root cause of enmity and hostility between friends and family. When anybody refuses to guarantee a loan, it could mean the end of a friendship or family relationship, they said, adding if he agrees to be a guarantor, then he becomes a victim of the borrower’s fraud.
Zakaria Ali, another Saudi, says that he never saw his close friend, who is also a relative, after agreeing to guarantee him so he could buy a car 18 months ago.
“I am now shouldering the burden of fully paying the amount once the three-year installment period expires. My lifelong friend’s strange behavior has made me distrustful of any member of society,” he said.
