- Written By: S.E. Smith
- Edited By: Niki Foster
- Last Modified Date: 28 November 2011
-
Copyright Protected:
2003-2012 Conjecture Corporation
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 or perform another person's debt or duty if that person 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 alike 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 guarantor is considered part of the loan application, so the guarantor's credit must be evaluated along with the other 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 out 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 handling the loan. A guarantor 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 the guarantor to back out of the agreement.
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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. |
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anon224949
Post 38 |
Will the below aged son or daughter or wife be the guarantor? |
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anon221615
Post 37 |
can anyone tell me if i am a guarantor for my cousin, will it affect me in getting future financing? |
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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 recieved 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? |
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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? |
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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! |
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anon122709
Post 31 |
I am guarantor for my daughter and she has just remarried. am I still liable? |
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anon122529
Post 30 |
anyone know how old you have to be to be a guarantor? |
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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? |
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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? |
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anon93249
Post 27 |
Can a guarantor of a person be an another guarantor of other person? |
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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? |
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anon76770
Post 24 |
A friend of mine got a guarantor loan recently? They are using these in the UK alot at the moment. These are a fairly new type of product i believe?
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anon73470
Post 23 |
Please, i need help. I am an international student and they insist i have a guarantor. |
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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. |
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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?
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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. |
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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? |
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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. |
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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? |
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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? |
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anon41312
Post 13 |
when signing as a guarantor, what details do you have to give? - Address, bank details, etc.? |
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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. |
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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? |
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giraffe
Post 10 |
what happens if a guarantor dies and can i change guarantors |
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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? |
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anon38528
Post 8 |
Does the guarantor must have an account in the bank from where the loan is applied? |
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jfields43
Post 7 |
When signing as a guarantor, does this get reported to the credit bureau? Does it affect your debt to income ratio? |
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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??
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anon25590
Post 3 |
my mother went guarantor for my brother-in-law, with her house. she recently passed away. what happens in this matter? |
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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? |
