A guarantor is someone who pledges that a loan or other type of debt will be paid. Usually, a guarantor agrees to pay or perform another person's debt or duty should that person fail to do so. 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 – should the child default on his or her debt, the parent would be held liable for the remainder of the loan.

Use of a guarantor does not ensure that a loan application will go through, because the guarantor is considered part of the loan application, and his or her credit will be evaluated along with the other applicants. If the lending institution feels that the guarantor cannot make good on the debt, they will not approve the loan. When seeking out a guarantor, it is important to keep this in mind.

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

Before agreeing to serve as a guarantor, it's important to assess the primary borrower's credit, income, and expenses, to determine whether or not he or she is capable of handling the loan. Be prepared to repay the entire amount if the primary borrower defaults and do not agree to offer a guarantee if you are unable to do so. Find out if the amount being borrowed is fixed, and if so, at what amount. Make certain that you have a copy of the loan contract and that you read and fully understand it before signing, because there is no way to back out of a guarantee.