What is the guarantor?

A guarantor is a person or entity who agrees to be responsible for another person's or entity's financial obligations in the event they can no longer fulfill them. A common example of a guarantor is a parent who guarantees a loan for their child. The guarantor is essentially co-signing on the loan and agreeing to pay the loan if the borrower defaults. Guarantors are often required by lenders to mitigate their own financial risk. Guarantors must typically meet certain financial requirements and have a good credit score to be approved. However, they are not always required to provide collateral to secure the loan.