What Is a Guarantor?
A guarantor is a pecuniary term describing an individual who promises to pay a borrower’s debt in the event that the borrower defaults on his or her loan obligation. Guarantors pledge their own assets as collateral against the allowances. On rare occasions, individuals act as their own guarantors, by pledging their own assets against the loan. The term “guarantor” is oftentimes interchanged with the term “surety.”
Key Takeaways
- A guarantor guarantees to pay a borrower’s debt in the event that the borrower neglects on a loan obligation.
- The guarantor guarantees a loan by pledging his or her assets as collateral.
- A guarantor alternatively describes someone who affirms the identity of an individual attempting to land a job or secure a passport.
- Unlike a co-signer, a guarantor has no claim to the asset purchased by the borrower.
Agreement the Role of a Guarantor
A guarantor is typically over the age of 18 and
In the event of a default, the guarantor’s credit history may be adversely hurt, which may limit his or her own chances of securing loans in the future.