Document background
The Personal Guarantee Loan Agreement is a crucial document in Philippine lending practices, typically used when additional security is required for a loan transaction. It's particularly relevant when a primary borrower's creditworthiness needs to be supplemented by a third party's guarantee. The agreement, governed by Philippine law including the Civil Code and Truth in Lending Act, creates a legally binding commitment from the guarantor to assume responsibility for the loan if the primary borrower defaults. This document is essential for financial institutions in managing credit risk and is commonly used in both commercial and personal lending scenarios. It must include specific provisions required under Philippine law, such as clear disclosure of terms, interest calculations, and enforcement mechanisms. The agreement serves as a risk mitigation tool while providing detailed procedures for guarantee enforcement and protecting the rights of all parties involved.
