A guarantor is a person who agrees to take responsibility for someone else's debt or financial obligation if that person fails to pay. Essentially, the guarantor promises to repay a loan, rent, or other financial commitments if the primary borrower or tenant defaults

Key Points About Guarantors:

• A guarantor guarantees to pay the borrower's debt if the borrower cannot meet their obligations

• Guarantors often pledge their own assets as collateral for loans, making them liable if the borrower defaults

• Guarantors are commonly used in situations like loans, mortgages, or rental agreements, especially when the borrower has poor credit history or insufficient income

• Unlike co-signers, guarantors are only responsible if the borrower defaults; they do not have ownership rights over the purchased asset

• Guarantors can be relatives, friends, or others who have a strong enough credit history and income to cover the debt if needed

• Being a guarantor is a serious legal and financial commitment, as failure by the borrower can negatively impact the guarantor's credit and finances

Examples:

• Parents often act as guarantors for their children renting property or obtaining a mortgage when the child lacks sufficient income or credit history

• In home loans, a guarantor may provide additional security by offering equity in their own home to help the borrower qualify for a loan or avoid mortgage insurance

In summary, a guarantor is someone who legally commits to cover another person's financial obligations if that person cannot pay, thereby providing lenders or landlords with additional security