There are various things for which we take loan. Even for the mobile which are of not so greater amount then also one wishes to take for the loan. For the lesser amount the lender does not do much of the formalities and as the amount of the loan goes on the formalities also keep on increasing. For instance in the case of mobile the lender often take cheque in advance. This is the legal instrument which one keep with oneself for the security for the payment of the amount taken as loan. For the higher amount of loan one need to Guarantor on a Loan.
These guarantors give the guarantee of the person who is obliged by the financial instruments under a loan. There are various loans, which are, taken by the person as car loan, home loan and many others. For various loans and depending on the amount of the loan they go for the capability of the guarantor. If the capability of the guarantor is less as compared to the loan amount required then these financial institutions does not give the loan to the person. so the capability to repay should be there for both of the person who are taking the loan and guarantor.