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A party who will guarantee repayment or performance of a covenant.


A third party who promises to provide payment on a bond, loan, or other liability in the event of default. While many guarantees apply to debt instruments, they may also be used for day-to-day expenses. For example, a parent may be a guarantor for an adult child and promise to pay rent to a rental agency if the adult child does not do it. Banks often serve as guarantors on behalf of certain clients, but, just as often, private parties serve as guarantors and promise payment on private loans. Guarantors reduce the risk to loans and liabilities, and usually improve the credit agency ratings of bonds.


If lenders are concerned about your income, your credit history, or other risk factors when you apply for a loan, they may require a guarantor, or cosigner.

The guarantor signs the loan with you and agrees to pay your debt if you default. For example, lenders may fear that your income may not be high enough to meet your payments if you encounter any unexpected financial setbacks.

Laws governing who may serve as a guarantor vary from state to state. Some states require that your guarantor be a resident of the state where you're obtaining the loan, while others will accept guarantors from out of state as well.

References in periodicals archive ?
The loophole has drawn complaints from guarantors that they have not been given sufficient explanation of the serious implications of the upper-limit guarantee clause.
This article discusses the circumstances under which (1) former business owners can deduct interest on these payments and (2) guarantors can take a bad debt deduction when required to pay the outstanding debt.
Guarantors can facilitate a federal obligation locally.
It is too late for many guarantors to do anything after discovering that the borrowers they have endorsed are unscrupulous people who have not been sincere in settling their debts.
35 per cent initially, which is available on a guarantor basis, and lasts for the full term of the mortgage.
People who act as a guarantor don't have the basic protections we expect when taking out a loan, even though they may have to pay back the whole amount plus interest.
LOANS WARNING Guarantor loans are saddling friends and relatives with "mountains of debt" and are potentially just as damaging as payday loans, a charity has warned.
A new report from the charity says guarantor loans, where a borrower typically gets a friend or relative to be their substitute should they default on repayments, can be just as damaging as payday loans.
Earlier, the lenders had red-flagged a proposal that guarantors of loans-turned-bad be let off the hook.
ISLAMABAD -- Supreme Court (SC) has reserved judgment on NAB appeal filed against high court decision for declaring innocent one Mukhtar, guarantor of Sharif family in the case filed against Ittefaq Foundry for defaulting on payment of one billion rupees.
A claim was brought by the landlord against the guarantor requiring it to be responsible for rent and other sums owing under the lease following the tenant's insolvency.