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Simple English definitions for legal terms
guarantor
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A quick definition of guarantor:
A guarantor is someone who promises to pay back money if the person who borrowed it can't. For example, if someone borrows money from a bank, the bank might ask for a guarantor to sign the loan agreement too. This means that if the borrower can't pay back the money, the guarantor will have to pay it back instead. A guarantor only has to pay if the borrower can't, and this is different from a surety who has to pay as soon as they sign the agreement.
A more thorough explanation:
A guarantor is a person or entity that agrees to take on the financial responsibility of another party if that party is unable to fulfill their obligation. This means that if the original party cannot pay back a loan or fulfill a contract, the guarantor will step in and pay instead.
Let's say that John wants to borrow money from a bank to buy a car. The bank may require John to find a guarantor who will co-sign the loan agreement. John's friend, Sarah, agrees to be his guarantor. This means that if John is unable to pay back the loan, Sarah will be responsible for paying it back instead.
Another example could be a landlord requiring a guarantor for a tenant who has a poor credit history. The guarantor would agree to pay the rent if the tenant is unable to do so.
The key difference between a guarantor and a surety is that a surety's liability arises as soon as the contract is signed, while a guarantor's liability only arises when the borrower defaults on their obligation.