Guarantor
Banking
A party who agrees to be responsible for the payment of another party's debts should that party default.
- — Dictionary of Banking Terms and Phrases
- — Dictionary of Banking Terms and Phrases retrieved 2014-05-16
Personal Finance
A party who agrees to be responsible for the payment of another party's debts should that party default.
- — Pocket Cents Glossary retrieved 2014-05-16
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.