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CONTRACT OF GUARANTEE FOR VEHICLE HIRE PURCHASE/LOAN Template — 🇳🇬 Nigeria

This Contract of Guarantee for Vehicle Hire Purchase/Loan is a crucial legal document in Nigeria, primarily governed by the Hire Purchase Act (Cap H4 LFN 2004) and general contract law. For enforceability, it must be in writing and signed by the Guarantor, adhering to the Statute of Frauds. While not a government-issued form, it is essential for securing vehicle financing and must be properly stamped by the Federal Inland Revenue Service (FIRS) to be admissible as evidence in Nigerian courts. Non-compliance with the formalities specified in the Hire Purchase Act for the main agreement can render this guarantee unenforceable.

Informational only, not legal advice. Have high-value or high-risk agreements reviewed by a licensed attorney.

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CONTRACT OF GUARANTEE FOR VEHICLE HIRE PURCHASE/LOAN

This is a collateral contract in which a third party (the Guarantor) promises to fulfill the hirer's or borrower's payment obligations under a vehicle Hire Purchase or loan agreement if the principal debtor defaults. It provides additional security to the finance company, dealer, or lender (Creditor), allowing them to pursue the Guarantor directly as a secondary debtor.

1. PARTIES TO THIS AGREEMENT

This Contract of Guarantee is made and entered into on this [DAY] day of [MONTH], [YEAR]. BETWEEN: 1. [CREDITOR COMPANY NAME] (RC No. [CREDITOR COMPANY RC NUMBER]), a company duly incorporated under the laws of the Federal Republic of Nigeria and having its registered office at [CREDITOR COMPANY ADDRESS] (hereinafter referred to as “the Creditor”, which expression shall where the context so admits include its successors-in-title and assigns) of the FIRST PART. AND 2. [PRINCIPAL DEBTOR FULL NAME] of [PRINCIPAL DEBTOR ADDRESS] (hereinafter referred to as “the Principal Debtor”, which expression shall where the context so admits include his/her heirs, executors, administrators, personal representatives and assigns) of the SECOND PART. AND 3. [GUARANTOR FULL NAME] of [GUARANTOR ADDRESS], a citizen of Nigeria with National Identification Number (NIN) [GUARANTOR NATIONAL IDENTIFICATION NUMBER (NIN)] (hereinafter referred to as “the Guarantor”, which expression shall where the context so admits include his/her heirs, executors, administrators, personal representatives and assigns) of the THIRD PART.

2. RECITALS

WHEREAS: a. The Principal Debtor has applied to the Creditor for a facility to finance the acquisition of a motor vehicle (hereinafter referred to as “the Vehicle”) under a Hire Purchase Agreement or Loan Agreement (hereinafter referred to as “the Principal Agreement”). b. The Creditor has agreed to grant the said facility to the Principal Debtor subject to the execution of this Contract of Guarantee by the Guarantor, whereby the Guarantor undertakes to guarantee the due performance by the Principal Debtor of all his/her obligations under the Principal Agreement. c. The Principal Agreement is dated [DATE OF PRINCIPAL AGREEMENT] and concerns the Vehicle described as follows: Make: [VEHICLE MAKE] Model: [VEHICLE MODEL] Year of Manufacture: [VEHICLE YEAR OF MANUFACTURE] Vehicle Identification Number (VIN) / Chassis Number: [VEHICLE IDENTIFICATION NUMBER (VIN) / CHASSIS NUMBER] Engine Number: [VEHICLE ENGINE NUMBER] Current Registration Number: [VEHICLE CURRENT REGISTRATION NUMBER] Current Odometer Reading: [CURRENT ODOMETER READING (KM)] km. d. The cash price of the Vehicle is ₦[VEHICLE CASH PRICE (₦)] ([VEHICLE CASH PRICE (WORDS)] Naira Only) and the total Hire Purchase price is ₦[TOTAL HIRE PURCHASE PRICE (₦)] ([TOTAL HIRE PURCHASE PRICE (WORDS)] Naira Only), payable in [NUMBER OF MONTHLY INSTALLMENTS] monthly installments of ₦[AMOUNT OF EACH INSTALLMENT (₦)] ([AMOUNT OF EACH INSTALLMENT (WORDS)] Naira Only) each, as detailed in the Principal Agreement. e. The Guarantor, being fully aware of the terms and conditions of the Principal Agreement and the financial obligations of the Principal Debtor thereunder, has agreed to provide this guarantee as consideration for the Creditor advancing the said facility to the Principal Debtor.

3. THE GUARANTEE

In consideration of the Creditor granting the facility to the Principal Debtor under the Principal Agreement, the Guarantor hereby unconditionally and irrevocably guarantees to the Creditor the due and punctual payment and performance by the Principal Debtor of all his/her payment obligations, liabilities, and undertakings whatsoever, whether present or future, actual or contingent, primary or secondary, incurred or to be incurred under or in connection with the Principal Agreement (hereinafter referred to as “the Guaranteed Obligations”). The Guarantor's liability under this Guarantee shall be co-extensive with that of the Principal Debtor and shall be a continuing guarantee for the full amount of the Guaranteed Obligations, including, but not limited to, the principal sum, interest, costs, charges, expenses, and any other sums payable by the Principal Debtor under the Principal Agreement.

4. NATURE OF GUARANTEE AND INDEPENDENT OBLIGATION

This Guarantee shall be a primary obligation of the Guarantor and shall be construed as a guarantee and not merely as an indemnity. The Guarantor's liability hereunder shall not be affected or discharged by any time, indulgence, waiver, or concession granted by the Creditor to the Principal Debtor, or by any variation, amendment, or novation of the Principal Agreement, or by any invalidity, unenforceability, or irregularity of the Principal Agreement or any other security taken by the Creditor. The Creditor shall be at liberty to proceed against the Guarantor for the recovery of any sums due under the Guaranteed Obligations without first taking proceedings against the Principal Debtor or enforcing any other security held by the Creditor.

5. REPRESENTATIONS AND WARRANTIES OF THE GUARANTOR

The Guarantor hereby represents and warrants to the Creditor that: a. The Guarantor has the full power, authority, and legal capacity to enter into and perform his/her obligations under this Guarantee. b. This Guarantee constitutes valid, legally binding, and enforceable obligations of the Guarantor. c. The Guarantor has obtained independent legal advice regarding the terms and implications of this Guarantee or has knowingly waived the right to do so. d. All information provided by the Guarantor to the Creditor in connection with this Guarantee is true, accurate, and complete in all material respects.

6. INDEMNITY

The Principal Debtor hereby irrevocably indemnifies and undertakes to keep the Guarantor indemnified on a full indemnity basis against all losses, liabilities, costs, expenses, claims, and demands whatsoever which the Guarantor may incur, suffer, or sustain arising out of or in connection with this Guarantee or any enforcement thereof. This indemnity shall be a separate and independent obligation of the Principal Debtor and shall survive the termination of this Guarantee.

7. DEFAULT AND ENFORCEMENT

Upon any default by the Principal Debtor in the performance of the Guaranteed Obligations, the Creditor shall be entitled to demand payment or performance from the Guarantor by notice in writing. Such demand shall be conclusive evidence (in the absence of manifest error) of the amount due from the Guarantor hereunder. The Guarantor shall, upon receipt of such demand, immediately pay to the Creditor the amount so demanded without any set-off, counterclaim, or deduction whatsoever.

8. GOVERNING LAW AND JURISDICTION

This Contract of Guarantee shall be governed by and construed in accordance with the laws of the Federal Republic of Nigeria. The parties irrevocably submit to the exclusive jurisdiction of the Nigerian courts in respect of any dispute or matter arising out of or in connection with this Guarantee.

9. ENTIRE AGREEMENT

This Guarantee constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior discussions, negotiations, and agreements, whether oral or written, relating thereto. No amendment, modification, or waiver of any provision of this Guarantee shall be effective unless it is in writing and signed by all parties hereto.

10. SEVERABILITY

If any provision of this Guarantee is found by any court or administrative body of competent jurisdiction to be invalid, unenforceable, or illegal, the other provisions shall remain in full force and effect. The parties shall negotiate in good faith to agree an alternative provision that is valid, enforceable, and legal.

SIGNATURES

Creditor (Company Name) — Signature

Printed Name: ________________________

Date: ______________

Director — Signature

Printed Name: ________________________

Date: ______________

Company Secretary / Director — Signature

Printed Name: ________________________

Date: ______________

Principal Debtor — Signature

Printed Name: ________________________

Date: ______________

Guarantor — Signature

Printed Name: ________________________

Date: ______________

Witness to Principal Debtor and Guarantor — Signature

Printed Name: ________________________

Date: ______________

About This CONTRACT OF GUARANTEE FOR VEHICLE HIRE PURCHASE/LOAN Template

Lenders financing a vehicle purchase in Nigeria often ask for a guarantor before releasing funds, and this Contract of Guarantee is the document that makes that guarantee mean something legally — spelling out exactly what the guarantor is on the hook for if the borrower defaults.

It's a collateral agreement: a third party, the guarantor, promises to cover the borrower's payment obligations under a hire-purchase or loan agreement if the borrower defaults. That gives the lender — a finance company, dealer, or bank — a second line of recovery, and it's often what makes financing possible for a borrower whose own credit history wouldn't otherwise clear the bar. Where the underlying deal is a hire-purchase arrangement, the Hire-Purchase Act, Cap H4, Laws of the Federation of Nigeria 2004 applies, and the guarantee needs to reference that agreement's actual terms — the vehicle's identity, the cash price, and the installment structure — rather than standing alone.

For the guarantee to hold up, it has to be in writing and signed by the guarantor; Nigeria's Statute of Frauds makes an oral guarantee unenforceable outright. Beyond that signature, a properly drafted guarantee identifies all three parties clearly — creditor, principal debtor, and guarantor, with full names, addresses, and ID (NIN, BVN where relevant) — states plainly what the guarantee actually covers (principal, interest, penalties, and whether liability is capped or unlimited), and confirms Nigerian law and jurisdiction. Stamp duty matters more than people expect here: an unstamped guarantee is inadmissible as evidence in a Nigerian court, so getting it stamped through FIRS promptly after signing isn't optional if the document might ever need to be enforced.

Notarization isn't legally required but is worth doing anyway for a document with this much financial weight, and witnesses for both the debtor's and guarantor's signatures add further evidentiary value. If a guarantor does end up covering a default, the creditor can pursue them directly — through garnishee orders or property attachment via the courts — for the full guaranteed amount, which is typically the entire outstanding balance rather than a capped share. That's the detail most guarantors underestimate: agreeing to guarantee someone's car loan can mean being liable for the whole thing, not a token amount, so understanding the scope of liability before signing matters more than almost anything else in the document.

Anyone agreeing to guarantee someone else's vehicle loan should read the default clause closely before signing — it usually determines whether the lender can come after the guarantor directly, not just the borrower, once a payment is missed.