Guarantor

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DEFINITION of 'Guarantor'

A person who guarantees to pay for someone else's debt if he or she should default on a loan obligation. A guarantor acts as a co-signor of sorts, in that they pledge their own assets or services if a situation arises in which the original debtor cannot perform their obligations.

BREAKING DOWN 'Guarantor'

Usually, people or businesses with poor or limited credit history can only get a loan if they have a guarantor. For example, an individual with a comparatively low credit score looking to obtain a line of credit to cover unforeseen expenses may be required by the bank to find a guarantor before the bank will issue them the line of credit.

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RELATED FAQS
  1. How do standby letters of credit help facilitate international trade?

    The nature of international trade inherently creates significant exposure to counterparty risk for those involved. Two parties ... Read Full Answer >>
  2. How are my cosigners affected if I file bankruptcy?

    Cosigners assume the responsibility to pay for another individual's debt in the event of a default, and that responsibility ... Read Full Answer >>
  3. How can I take a loan from my 401(k)?

    The majority of employers offer eligible employees the opportunity to save for retirement in a qualified plan through paycheck ... Read Full Answer >>
  4. How does a bank determine what my discretionary income is when making a loan decision?

    Discretionary income is the money left over from your gross income each month after taking out taxes and paying for necessities. ... Read Full Answer >>
  5. What is the difference between a possessory and a non-possessory lien?

  6. When capitalizing interest, will interest accrue while you are in a deferment?

    When capitalizing interest, interest accrues while a person is in a deferment of his loan. In the event of a deferment, the ... Read Full Answer >>

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