Guarantor Definition: A guarantor is a party or person who promises to pay off a borrower’s debt if they do not pay in full. If the borrower defaults on a loan, the guarantor becomes responsible for the repayment. When a guarantor agrees to sign a loan contract, they also pledge their own assets as a form of collateral in the event they are unable to repay the loan in full, should the borrower default.
A guarantor is also known as a surety. In many cases, a guarantor must verify their identity, similarly to the borrower, and provide a credit report. A guarantor does not have any ownership of the loan, unlike a co-signer, who does have a right to the asset.