Wonder

Research Outline

Prepared for Tan | Delivered August 1, 2019

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.