[5haS_0209]

My dad's partner purchased a KUV100 K8 in 2016 through loan from Mahindra finance. He has properly paid all the installments and since COVID hit, he was unable to pay some installments and had extended the tenure of loan. He was paying it for some time and had defaulted for 5 installments of 25,000 each and now the tenure is over and cannot be extended further. My dad has a poor ability of remembering something and he has signed as the Guarantor for the loan. They have showed all the documents he has signed including a green paper.

Now comes the issue. The recovery agent who is from Mahindra finance itself (not a third party) comes to our house every now and then asking for money.
Since my dad is sick and bed rest for the past one year, me and my mother had to handle this agent. I kindly told him if you're not able to recover the money, take possession of the car itself. Why are you troubling us? Seems like the partner left the car for a service in Mahindra Authorized service center and he has a pending due of Rs.61,000 there. So the recovery team could not repossess the vehicle. The partner has around Rs.1.3L pending to Mahindra finance and Rs.60k pending to the service center.

But since they all are in the same network, can't they repossess the vehicle and sell it off? The one thing I don't understand is my dad's partner is still in town and they know his place of residence, office and every other detail about him. They also know where his car is. Then why do they pester the Guarantor? My mother's mental pressure has gone up because of this issue going on.

The two solutions my dad's partner has is:
1. Either pay Rs.60k to the service center to release the car to Mahindra finance. Which he won't do because they would sell his car off and he doesn't want that to happen. My dad and partner are not in good terms now as well.
2. Pay Rs.1.3L to Mahindra finance so that they would stop pestering us. He says he would make the payment the next day, next week, next month. This has been happening for the past 3months.
I know it's my dad's fault to sign as a guarantor. Is there any other way to try to talk the recovery agent to stop coming to our house?

[GTO]

Thread moved from the Assembly Line to the Car Loans section.

Your Dad is liable for the car loan as the guarantor. That's just the way the system works, and rightly so.

[androdev]

You should be complaining against your dad’s partner and get some neutral person to mediate a solution. He is the source of the problem and solution must come from there.

Loan recovery guys are not at fault, as long as they are not breaking any law. You are knocking on the wrong door.

[condor]

Originally Posted by GTO

Your Dad is liable for the car loan as the guarantor. That's just the way the system works, and rightly so.

Like the OP asks, if the guarantor refuses to pay, cant the lien holding company (here Mahindra Finance) sieze the car ? IIRC, till the loan is paid up, the asset belongs to the financer. They can legally take away the asset. And such siezed vehicles are what are auctioned/sold off regularly by financing companies.

[Turbanator]

I will have a different take, no doubt OPs dad was a guarantor, but if the asset value is higher than recovery, then they should not bother his dad.

What these guys have sensed is OP's dad and family are easy to pressurise, and somehow they see a chance of recovery faster over repossessing that asset.

OP needs to deal with these finance companies firmly and tell them to sort internally by selling the car after taking possession. The max they can come is to show at his door or make calls, but anything physical and those finance guys will be in trouble. As soon as they sense that OP is even tough to handle than that defaulter, they will stop chasing.

OP should not give excuses like family sickness or inability to pay, he just needs to show he is strong and show them the door and tell them to come only if the loan value is short after selling that Jeep.

[thanixravindran]

Finance doesn't want to incur 60,000 as cost to possess the vehicle as it adds cost of recovery. So they are trying to recover from the guarantor. Please check and arrange a meeting with local people involved with all parties involved. You may pay 60k due to service centre. So car can be possessed by finance company. The ordeal will end. Consider this as the price to pay for the guarantee signed. But at least the crook won't get the car and your loss is minimum compared to 1.3L.

Other options -

Option 1: if you want to proceed legally, please get a lawyer to get a civil suit filed and get injunction against recovery from you. This will be time consuming. You can cite all the mental harrasment and ask for the original agreement and get the witness to it but mostly will be granted if it is genuine case.

Option 2 - Please check the Market value of the car. If it exceeds the amount due to finance and service centre, get an lawyer involved to get a tripartite agreement with owner of car that he will transfer the possession of car to you if you clear the dues. You can sell it off. This is tough to execute but possible with experts/agents.

[jkrishnakj]

What happens if the OP takes a strong stance and says that he CAN’T pay either? Would the finance company then initiate a civil proceed against the borrower (OP’s dad’s former friend)? Or would the burden still come over to the OP’s family?

While I agree that the finance guys are doing no wrong in knocking on the guarantor’s door, it surely feels unfair that the actual borrower defaults and sits tight and immune to this issue.

[itisK]

This is what the guidelines from Yes Bank says on this:

Loan Guarantor is not a Co-Borrower
Commonly, the terms of a co-borrower and loan guarantor are used interchangeably, however, this is a misconception. A loan guarantor comes into the scene only when both the borrower and co-borrower are unable to repay the loan and the bank considers that recovery is impossible due to some circumstances.


https://www.yesbank.in/life-matters/...loan-guarantor

If we go by this, what Mahindra finance is doing here is not right. They can take possession of the vehicle in question, which they are not doing. Maybe because it is easier to harass people than doing all the paperwork to seize the vehicle

[KA18]

As far as I know, the guarantor is liable only if the original buyer dies or absconds and there is no means of recovery of the dues.

In this case, the borrower is alive, hasn't fled town and even the assest against which the loan was provided is also available.

Harassing the guarantor is fully illegal.

The financier can be told to get lost. They don't have any stand here.

[akg7091]

They have NO locus standi to harass you as long as the

1 ) Borrower is traceable
2 ) They haven't taken possession of the vehicle

They can come to your dad and ask him to execute guarantee on the loan only if they are unable to trace the borrower AND the vehicle. If they can trace the vehicle, the first recourse of action legally is to repossess the vehicle, auction it, and if there are any pending dues post auction ask your Dad to stand guarantee. Even this can be fought in a court of law if they haven't followed up with the borrower with the same gusto as they have with your family. In a nutshell, tell them to get lost and send a legal notice if it is indeed your dad who is supposed to pay as they claim

[vrprabhu]

Originally Posted by 5haS_0209

.. my dad's fault to sign as a guarantor. Is there any other way to try to talk the recovery agent to stop coming to our house?

This is the practical solution (however, the hiccup here is whether the ASS will accept payment from you and release the car to the financier; because, in case the owner challenges them how the car was released by accepting payment from a third party, ASS will be in a soup) -

Originally Posted by thanixravindran

.... You may pay 60k due to service centre. So car can be possessed by finance company. The ordeal will end. Consider this as the price to pay for the guarantee signed. But at least the crook won't get the car and your loss is minimum compared to 1.3L.....

Alternative is that, make an offer to financier that you will clear their dues if the car is transferred to your name and delivered to you (they are likely to be holding blank transfer forms signed by the owner). Every company would like to settle for a compromise, recover maximum dues and move on.... may be you can find a midway settlement? If you do, be sure to take written commitments from them for the settlement to avoid future complications.


The misconceptions (expressed by some members) regarding guarantors liability is not the factual position. GTO is correct - once you have signed as a guarantor your liability to repay the dues is co-terminus with that of the borrower. The lender can always claim the borrower isn't repaying the dues and he is exercising his right to recover the dues from the guarantor. This right can be enforced by them legally. (There is another recent thread on the harassment faced by the guarantor, for additional discussion on this issue, here - https://www.team-bhp.com/forum/india...hlight=suicide (Purchaser did not repay car loan, guarantor commits suicide))

[anjan_c2007]

Please immediately file a writ petition (your lawyer should be trustworthy) in the Madras High Court to restrain the Mahindra Finance staffers (they also employ foul mouthed recovery agents in many cases) from approaching your father, the guarantor, unless all available options to recover the amount due from the loanee under the Civil Procedure Code are not exhausted. The court can give you an interim stay order in the first hearing itself, after service of notice to Mahindra Finance, the respondent and the loanee the business partner plus others if any.

For loans or defaults the loanee is fully liable at the first instance. The High Court looking into the merits of the case can at the subsequent hearings ask the loanee to submit the lists of his movable and immovable properties on oath (any concealment and untrue statements on oath can land him behind the bars) and thereafter pass orders to attach movable properties of the loanee in the first instance. The attached properties can be sold by the loan disbursing agency to recover their due amount. Next, if the due recovery amount is not obtained even thereafter, immovable properties of the loanee are attached by a subsequent order and sold by the loan disbursing agency.

Thereafter, only after exhausting the above options can the guarantor be approached by the loan disbursing agency. The law is very clear.

You will have to submit proof to the court to prove that these recovery agents are approaching your father at his residence repeatedly and coercing him using unlawful means without following the due process of law. Also, submit proof that your father is sick and bedridden.

[nagaraj15]

Recovery agent couldn't collect the money from the person who has taken the loan but has all the means to collect it from the guarantor without any qualms.

Suppose for some reason, the guarantor is also in the same position as the person who has taken the loan and is unable to pay. Now, why can the loan recovery person not take the same stand with the person who has taken the loan as the stand taken with the guarantor?

Only with the guarantor, will they play tricks. With the person who has taken the loan, they will soft pedal?

Strange are the ways!

[V.Narayan]

Originally Posted by Turbanator

I will have a different take, no doubt OPs dad was a guarantor, but if the asset value is higher than recovery, then they should not bother his dad.

What these guys have sensed is OP's dad and family are easy to pressurise, and somehow they see a chance of recovery faster over repossessing that asset.

OP needs to deal with these finance companies firmly and tell them to sort internally by selling the car after taking possession. The max they can come is to show at his door or make calls, but anything physical and those finance guys will be in trouble. As soon as they sense that OP is even tough to handle than that defaulter, they will stop chasing.

OP should not give excuses like family sickness or inability to pay, he just needs to show he is strong and show them the door and tell them to come only if the loan value is short after selling that Jeep.

Originally Posted by anjan_c2007

Please immediately file a writ petition (your lawyer should be trustworthy) in the Madras High Court to restrain the Mahindra Finance staffers (they also employ foul mouthed recovery agents in many cases) from approaching your father, the guarantor, unless all available options to recover the amount due from the loanee under the Civil Procedure Code are not exhausted. The court can give you an interim stay order in the first hearing itself, after service of notice to Mahindra Finance, the respondent and the loanee the business partner plus others if any.

I do not know if the law has changed since my days as a branch manager in a leading truck maker in the 1980s but the two posts above are rendering to you the most sensible advice. As a part of my job my team and I had to collect hire purchase instalments from truckers who bought their vehicles on hire purchase finance from us. In those days out sourcing of collections was not a practice and we company employees used to do it ourselves town by town. So I've literally been on the other side of the collection table except that my borrower was also my customer {bought trucks} and was always a grizzled truck veteran. I have highlighted the key phrases in the sage advice in the above two posts that you should pay heed to.

Even in the 1980s we always had a guarantor. Technically the guarantor is liable to pay even before all remedies have been exhausted. That is the settled law as far as I know but in practise you can get the kind of restraining order advised above.

Thereafter, only after exhausting the above options can the guarantor be approached by the loan disbursing agency. The law is very clear.

As I said earlier it has been over 35 years since I went door to door collecting instalments but the law is quite clear that an unconditional guarantor is liable to pay as soon as any one instalment is in default. I would suspect all these car loan cases the guarantor is an unconditional one. A conditional Guarantor, sometimes found in a more corporate loan environment of SMEs, can be a case where the bank can approach the guarantor after exhausting certain well spelt out remedies.

[jkrishnakj]

So, in summary, the OP should ask the finance guys to take a a walk given the borrower is still walking around and the asset is still traceable. That’s what I read from some of the very informative posts above.