When buying a used car on loan in Malaysia, a guarantor might be needed to secure financing, especially if you’re a young buyer or have limited credit history. A guarantor agrees to repay the loan if you can’t.
1. Parents
Parents are the most common choice for guarantors. Their financial stability and direct relationship with the borrower make them a preferred option for banks.
2. Spouse
If you are married, your spouse can act as a guarantor. This option is often used when couples plan their finances together, as a spouse’s income or credit history can strengthen your loan application.
3. Children
Adult children with stable incomes can also act as guarantors for their parents. This is particularly helpful for older borrowers who may need additional financial support to secure a loan.
Who Cannot Be a Guarantor?
As of the latest regulations, financial institutions no longer accept extended family members (such as uncles, cousins, or siblings), or friends. These changes aim to minimize risks and ensure closer accountability between the borrower and guarantor.
Conclusion
A guarantor can play a key role in securing a used car loan, particularly for first-time buyers or those with limited credit. It's important to select a guarantor who is financially reliable and understands the risks, as the guarantor will bear the responsibility if the loan is not repaid. Understanding who can become a guarantor and what this entails will help you navigate the car-buying process with confidence.
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