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What is a Guarantor?

Mary McMahon
Updated May 16, 2024
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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.

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.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a SmartCapitalMind researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Discussion Comments
By anon946331 — On Apr 18, 2014

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?

By picu3111 — On Mar 12, 2014

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?

By anon338611 — On Jun 15, 2013

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?

By anon338337 — On Jun 13, 2013

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?

By anon334899 — On May 16, 2013

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.

By anon311394 — On Jan 01, 2013

Can a retired person be a guarantor?

By anon307119 — On Dec 03, 2012

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.

By anon305881 — On Nov 28, 2012

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?

By anon282361 — On Jul 28, 2012

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?

By anon281953 — On Jul 26, 2012

Can a retired person be a guarantor?

By anon275875 — On Jun 20, 2012

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!

By saint — On Apr 17, 2012

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.

By anon260613 — On Apr 11, 2012

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

By anon255589 — On Mar 18, 2012

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.

By lunhaokip — On Mar 16, 2012

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.

By anon250262 — On Feb 25, 2012

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.

By anon232010 — On Nov 28, 2011

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.

By anon224949 — On Oct 25, 2011

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

By anon221615 — On Oct 12, 2011

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

By anon198943 — On Jul 21, 2011

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?

By anon147011 — On Jan 28, 2011

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?

By anon130654 — On Nov 29, 2010

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!

By anon122709 — On Oct 29, 2010

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

By anon122529 — On Oct 28, 2010

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

By anon114573 — On Sep 29, 2010

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?

By krishma — On Sep 05, 2010

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?

By anon93249 — On Jul 02, 2010

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

By anon83524 — On May 11, 2010

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?

By anon76770 — On Apr 12, 2010

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?

By anon73470 — On Mar 27, 2010

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

By anon72506 — On Mar 23, 2010

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.

By anon70278 — On Mar 13, 2010

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?

By anon65017 — On Feb 10, 2010

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.

By anon60938 — On Jan 17, 2010

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?

By linda1 — On Jan 07, 2010

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.

By anon41796 — On Aug 17, 2009

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?

By elmo650 — On Aug 17, 2009

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?

By anon41312 — On Aug 14, 2009

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

By anon40748 — On Aug 10, 2009

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 endeavor is job security for people in the US. however our project, i must add, is a world changing project.

By anon39855 — On Aug 04, 2009

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?

By giraffe — On Aug 01, 2009

what happens if a guarantor dies and can i change guarantors

By anon38962 — On Jul 29, 2009

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?

By anon38528 — On Jul 27, 2009

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

By jfields43 — On Mar 19, 2009

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

By marichenem — On Mar 02, 2009


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??

By anon25590 — On Jan 31, 2009

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

By Angel — On Apr 30, 2007

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?

Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

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