Monday, November 12, 2007

Calculated risks

My brother accepted the offer to become the guarantor for my tenant's hire purchase. When asked about why he accepted the offer, he told us that it is a calculated risks. I think it is worth the risks that he is taking. This is what he will get for being a guarantor.

For the first 2 years, he will get RM3000. After that, my tenant would have to sell the car or find other guarantors to replace my brother. If my tenant fails to find other guarantor or fails to sell the car, he would have to pay my brother RM3000 every year until the car is fully paid. The car purchase price is only RM21,000.

Well, this is calculated risks. My brother is willing to take the risks for the offer, knowing that in the worst case scenario, he can pay up the total purchase price.

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