I think your dad can use the shoplot to do refinance from bank, if your dad have stable income i believe it will be no issue from bank to borrow out the loan. If you be the guarantor eventually this loan will eat up your credit limit as this consider your liability as well. Definition of Guarantor is when the borrower unable to pay for loan, then bank will request payment from guarantor.
This auto balance conversion is for your to save on the interest ( normal interest i believe is 18% per annum). However if you foresee you can settle this within 36 month then better dont take the program. Else you may need to check with bank do they charge you any cancellation fee if you want to make early payment. Similar as Flexi payment plan, where bank will have 1-2% upfront charges if you opt for 6/12 months installation, and t&c will stated early settlement will imposed cancellation fee of RM xxx.