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What Is a Guarantor?

A parent who cosigns a loan for a child is considered a guarantor.
A guarantor is a person or company that guarantees a loan will be paid.
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  • Originally Written By: Mary McMahon
  • Revised By: A. Joseph
  • Edited By: Niki Foster
  • Last Modified Date: 16 December 2014
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A guarantor is a person or company that guarantees that a loan or other type of debt will be paid. Usually, this person or company agrees to pay another person's debt or perform that person's duty if he or she should fail to do so himself or herself. The term is most commonly used in reference to financial assistance. A parent who cosigns a student loan for a child could be considered a guarantor; if the child defaults on his or her debt, the parent would be held liable for the remainder of the loan.

Why Guarantors are Used

Generally, loan applicants use guarantors if they believe that they will be unable to secure a loan on their own. This might be the case for applicants who have poor credit or no credit history. Individuals and businesses can serve as guarantors or can have guarantors for their loans. In the case of multiple guarantors, each one usually is liable for the entire amount of the debt. Some lending institutions require guarantors to be bonded for a certain amount — usually a percentage of the loan — so that the institution can be confident that the money is recoverable.

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The use of a guarantor on a loan application does not ensure that the loan will be approved, because the person who guarantees the loan is considered part of the loan application, so the credit rating of that person or company must be evaluated along with the loan applicant or applicants. If the lending institution believes that the guarantor cannot make good on the debt if the primary applicant defaults on the loan, then the lending institution will not approve the loan. When seeking a guarantor, someone who needs a loan should keep this in mind.

Risks of Being a Guarantor

Before agreeing to serve as a guarantor, a person should assess the primary borrower's credit, income and expenses to determine whether he or she is capable of paying back the loan. The person who guarantees the loan must be prepared to repay the entire amount if necessary and should not agree to guarantee a loan if he or she is financially unable to do so. Anyone who is considering whether to become a guarantor should obtain a copy of the loan contract and should be sure to read and fully understand it before signing it. After signing the contract, there is no way for him or her to back out of the agreement.

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Discuss this Article

anon946331
Post 58

I have been thinking about taking out a student loan this summer. Would I need a guarantor for that? Or do not all loans require a guarantor?

picu3111
Post 57

My father in law posed as a guarantor to his friend and kept his land as security, but recently he found out his friend has not paid his loan and the bank was starting to take legal actions against my father in law and also seize the land. Because of this, we had to pay off the loan. The loan is now paid, but I want to know if we could take any legal actions against his friend so that we get our money back from him?

anon338611
Post 56

My mother acts a guarantor for a money that someone borrowed. There is no signed contract about this agreement. The debtor left and now the person who loaned the money is asking my mother to pay the interest. Is my mother really be obliged to do so even she did not sign any contract? And if so, can't she just pay the principal at not the interest?

anon338337
Post 55

If anyone uses fake documents for a guarantor, what will be the action against that person in India and how can that guarantor take legal action against him?

anon334899
Post 54

Co-signing and being a guarantor are two different things. Every co-signer is a guarantor, but not every guarantor is a co-signer.

If you pledge to repay a debt of another without the possibility of personal return, then you are the co-signer. If you own a company and you guarantee your corporation's debt, then you are a guarantor because you own or have a interest in the property or equipment used as collateral for the debt, if you repay the debt as guarantor then you have your interest preserved.

If you pay the debt as a co-signer, you have an empty bank account and either the person you co-signed for or the lender has the item financed, not you.

anon311394
Post 51

Can a retired person be a guarantor?

anon307119
Post 50

I have reason to believe that a family member may have given my name as his guarantor (without my agreement) for a flat he is hoping to rent. If this is the case, will I be contacted by the property owner or his agent or would they just accept a completed form and forged signature? I am not in a position to act as a guarantor, plus the person concerned has been in debt including rent/mortgage several times in the past. Thank you for any advice you are able to give.

anon305881
Post 49

My husband recently signed as a guarantor for a friend to bail him out from being taken to jail but he was not the original guarantor when the loan was issued. now the bank says he is liable to pay the loan if the friend cannot pay. Is this right?

anon282361
Post 48

I didn't make enough to be a guarantor for my daughter even though my income is pretty high. Is it true that I have to make at least five times the monthly rent?

anon281953
Post 47

Can a retired person be a guarantor?

anon275875
Post 46

I had a call from my father today. He crashed his car and said that he had put me down as a guarantor! I never agreed to this and therefore it looks like he has forged my signature!

He said that if he is unable to pay this debt that I will be liable to pay it! I am absolutely fuming with him! He's my flesh and blood and now he might have gotten me into financial difficulty. I have just got a mortgage and am due to move in a week! What if this messes things up for my mortgage?

I don't know how to forgive him and my husband is angry with him. He might have caused a massive rift in the family, and given us a black mark for the future which we don't need!

If he had asked in the first place, at least we could have chosen if we were going to be a guarantor, but now we don't have a choice!

saint
Post 45

My immediate elder brother took out a loan and used it to purchase plots of land, and provided two guarantors. He had not finished paying back the loan before he was shot dead by armed robbers. He was married but without any children. I was used as his next-of-kin.

His employer called me for his burial rights since I was the next-of-kin before his death, but the guarantors prevented the employer from precessing the burial rights owing to the unpaid loan. What can I do? Though I promised the gurantors that I or the family of the deceased would pay the unpaid loan. Your legal advice will be highly appreciated.

anon260613
Post 44

I am going through a divorce. I am the guarantor on a loan for commercial property. Would I have ownership on this property?

anon255589
Post 43

I am a guarantor for my ex who was a sub representative for moneygram. There is no money owing but they are asking me to provide all documentation which I don't have access to. My ex has gone AWOL. Any advice is greatly appreciated.

lunhaokip
Post 42

Without my knowledge, I was made a guarantor for a loan taken out by my friend who is absconding. Am I responsible for this loan or liable for payment of this loan which was taken without my knowledge? I was not even aware of the loan agreement. Please help.

anon250262
Post 40

My brother asked my mum to call up somebody to tell them she is a guarantor for him and a loan which is in an excessive amount. My mother said no.

However, I suspect that he will go to any extent to make sure she becomes a guarantor and retrieve the money, like getting a fake signature, getting a female he knows to call up the company etc. If he does this, is there anything that helps the 'forced guarantor'? Any law or anything that goes against this? Or something that can help my mother?

I desperately need help please! My brother is a student and has so far failed to pay for a lot of things.

anon232010
Post 39

As franchisee, my wife wanted to lease a commercial space. As tenant, she will be using a new corporation name. Landlord wants both husband and wife as guarantors. Is this required by California law?

I wanted to remove my wife's name as guarantor so that just in case we didn't do good in this new business, only one gets bad credit.

anon224949
Post 38

Will the below aged son or daughter or wife be the guarantor?

anon221615
Post 37

can anyone tell me if i am a guarantor for my cousin, will it affect me in getting future financing?

anon198943
Post 36

I signed as a guarantor for one of my children eight years ago they have not had payment for nearly eight years. I have received a letter from a debt recovery asking for the full amount within three days. This is the first time I have heard from them. I have had no other correspondance before this. Can they do this?

anon147011
Post 34

My friend wants me to be a guarantor on an apartment he's going to rent. He wants me to sign for the first 6 months. He says that he will pay the money up front. Should I? Also, I'm in the process of signing my own lease for an apartment. Will this affect me in any way?

anon130654
Post 33

I left employment to become a student. However, i was previously a guarantor for my friend and am now concerned that if he doesn't pay it i will be really stuck. Am i able to get out of the contact somehow? Help please!

anon122709
Post 31

I am guarantor for my daughter and she has just remarried. am I still liable?

anon122529
Post 30

anyone know how old you have to be to be a guarantor?

anon114573
Post 29

my friend has just been told that because her first guarantor does not earn enough she needs a second guarantor. All very well but they said they must charge her £50. Is this right?

krishma
Post 28

If i went down as a guarantor for my daughter and she is not able to make the full repayments until she returns to work as she is currently on parental leave do i have to make the remaining amount of the repayment until she returns to work? if so, are there any exceptions to this?

anon93249
Post 27

Can a guarantor of a person be an another guarantor of other person?

anon83524
Post 25

If a person has more than one guarantor and they refuse to pay their part of it if the person cannot pay the loan back, do I have to pay back the loan myself?

anon76770
Post 24

A friend of mine got a guarantor loan recently? They are using these in the UK a lot at the moment. These are a fairly new type of product i believe?

anon73470
Post 23

Please, i need help. I am an international student and they insist i have a guarantor.

anon72506
Post 22

I recently signed as a guarantor for my pastor through my church. I'm in the process of looking to buy a home. Will this affect my credit rating and or scores. I was told this would only be viewed as an inquiry on my credit report.

anon70278
Post 21

when signing as a commercial guarantor, what details do you have to give? - Name, Passport I.D., address, bank details, etc.? Without a british nationality can he be a commercial guarantor?

anon65017
Post 19

I signed as guarantor for a loan my husband received for a business. the term was over four years.

Three years later, my husband got into financial trouble and the bank increased the loan without my consent or signature or even contacting me. Two years later the business failed and he was in arrears with the bank, and they came after me and intimidated me into signing over all of my savings. This was after the four year period.

Was that legal? It was two years ago and it still bothers me.

anon60938
Post 18

I was gaurantor on a loan for my grandma and she has now passed away and her estate has been left to her children and there was nothing in the will about the loan. does the debt have to be paid out of her estate money or am I now liable for the loan?

linda1
Post 17

Hi,please can you tell me if you have to be a home owner to be a guarantor, as my daughter is offering to be our guarantor for us but she doesn't own her own home but does work full time and has a bank account. Many thanks.

anon41796
Post 15

if I cosign for a loan for my son to help save his business, he defaults, ends up in a bankruptcy ch 7, loses his business, then two years later I die, what happens to the money in my estate?

elmo650
Post 14

I and five others have signed a guarantor for a church building loan. My question is what rights do we have in the administration of the church's financial transactions?

anon41312
Post 13

when signing as a guarantor, what details do you have to give? - Address, bank details, etc.?

anon40748
Post 12

There is a guarantor that is telling me that they will secure the loan amount we seek but we need to create US Jobs and they will guarantee payment back to the lender within 12 months. how true could that be? we are kept out of the promise. our only endeavour is job security for people in the US. however our project, i must add, is a world changing project.

anon39855
Post 11

Hi, my church asked me to be a guarantor on the church loan. Explain that to me, what will i have to do? Will my bad credit count against it?

giraffe
Post 10

what happens if a guarantor dies and can i change guarantors

anon38962
Post 9

We bought a family business, three of us: two brothers and a sister. My sister's husband is a guarantor on the loan. we all are 33.3 percent owners. my brother is married and he says his wife is a guarantor on the loan so she has a say. is this true?

anon38528
Post 8

Does the guarantor must have an account in the bank from where the loan is applied?

jfields43
Post 7

When signing as a guarantor, does this get reported to the credit bureau? Does it affect your debt to income ratio?

marichenem
Post 5

Hi,

I am married in community of property. My husband inherited property/house. We signed for a second bond on the house and they (bank) had my name on the papers as co-owner. After a year we had to re-sign the papers because they picked up on the title deed that their was a bequest on the property and that it was in my husbands name which made him the owner and me the guarantor. I told the bank that I don’t want to sign as guarantor, but they told me that I am automatically the guarantor because we are married in community.

Is there a possibility to remove my name as the guarantor??

anon25590
Post 3

my mother went guarantor for my brother-in-law, with her house. she recently passed away. what happens in this matter?

Angel
Post 1

I signed as a Guarantor on a apartment for my sister nowhere in the lease does it mention Guarantor on it only the Lessee. He let my sister out of the lease but wants me to sign something stating I will pay the back money owed and a new lease till Dec. and stating im off my sisters lease. Is this legal?

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