What Is A Guarantor? A Comprehensive Guide To All Things Involved

Wondering what is a guarantor and struggling to rent an apartment with bad credit or low income? Read this article to know everything about a guarantor and how to find one to rent the apartment of your dreams despite bad credit or a problematic financial profile.

We all love those high-end, luxury apartments laced with the latest facilities and entertainment features. They are everything we could have dreamed of. You would drool over them because they are so cool with their luxury pools and lush green grasses. They are irresistible, but not everyone dreaming of one can actually get one. In fact, it’s a hassle even to rent one of them.

It may seem easy, but it’s a huge deal for someone who has had even a few hitches along the way. If you have a bad rental history, landlords will give you a hard time renting an apartment. You will need to find a guarantor in most cases and in others, perhaps paying a larger amount for security and advance rent payment will do. In any case, hassle ensues.

There are quite a few formalities and legal complexities involved in the procedure. Having a guarantor is not about bringing just anyone to put a signature on the documents. The guarantor will have to have a solid financial portfolio and a sound record, or the landlord will not even accept them. The guarantor will also need to ensure financial ability to pay the loan or lease in case of default. It is a huge responsibility, and you may have to struggle a bit while searching for a guarantor.

There are many legal aspects of involving a guarantor, and all of them are listed below. Any details that you may want to know, big or small, common or unusual, you will find all the answers in this detailed article.

What is a guarantor?

A guarantor is an individual who promises to pay a borrower’s debt when that person defaults on the loan obligation. It is a legal obligation, and it takes guts to be someone’s guarantor. Guarantors will pledge their assets as collateral against the borrowers’ loans. On some occasions, individuals are their own guarantors, and that’s done by pledging their own assets against the loan.

In simple language, a guarantor is someone who gives a guarantee that a borrower will pay the debt in all circumstances, and if the borrower defaults, he or she will pay the debt. In this way, a guarantor eliminates uncertainty from the equation and makes lenders’ investments safe.

Understanding a guarantor

A guarantor must be over the age of 18, and he/she must reside in the country where the payment agreement occurs. Guarantors will usually have to show good credit histories and good enough income to cover the loan payments of the borrower in case the borrower defaults. The guarantor’s assets will be seized by the lender in case things go down.

Default is not the only situation you should be worrying about as a guarantor; if the borrower is constantly paying the installments late, the lender can charge penalties and additional interest rates against the loan. So a guarantor has a lot at stake when the real deal is between a lender and a borrower.

Why and when will you need a guarantor?

There are a few scenarios that will require a guarantor if you want to lease an apartment or get a loan. Just imagine that you finally found an apartment that matches your dreams, something you had always wanted, but all of a sudden, and out of nowhere, the property manager or landlord starts speaking of the shortcomings in your credit profile. He may have found some red flags while reviewing your application for the apartment.

The red flags that they may see:

Poor rental history

If it’s your first time renting a house, you will need a guarantor because lenders and landlords usually do not trust first-timers. This happens because the landlords do not know how you will behave once you have a financial commitment.

On the other hand, if you have been renting places for quite some time, you will do ok even without a guarantor. However, you will still need a guarantor if you have been renting homes with late payments and bad credit and payment reputation. A guarantor with good credit and a stable financial condition will help straighten things out and gain your landlord’s trust.

Bad credit

Have little or bad credit? You will need help from a guarantor to sound more trustworthy on the lease papers. If you have bad credit, bigger projects and larger apartment owners may not be pleased with your profile and will have a hard time trusting you.

In contrast, if you apply for a small apartment in a small project, landlords will show more leniency towards you, and that’s especially when you have a guarantor.

Low income

If you earn good, you will not probably have to look for a guarantor because your profile shows enough funds every month to sustain life and the rent. Usually, when you have rent that’s up to one-third of your income, your landlord will likely not ask for a guarantor. However, if your rent is more than this, you will need one.

Bankruptcy on your credit report

We all know it’s not possible to keep your bankruptcy secret. No matter how you try, your landlord will know about it. The worst part of it is that it will keep showing on your report for 7-10 years. Bankruptcy is a huge red flag for landlords because, as a borrower or a tenant, you do not seem like you can pay the installments on time when you are bankrupt.

When your financial situation does not seem so sound, you might as well look for a guarantor.

A guarantor with a sound financial report will alleviate your landlord’s concerns related to your past bankruptcy.

You have a prior eviction

Anything that says that you have not been a good tenant, you should get ready for trouble. For example, if you have a prior removal in the record, the landlords will demand a guarantor. It wouldn’t matter what the reason was behind the previous evictions or eviction; the landlord will take it as a red flag. A guarantor saves you from a bad situation by making the investment safer with his or her financial report.

Unreliable employment history

If your employment history shows signs of lack of reliability, it could make landlords have second thoughts before approving your application. Landlords want to make sure that you have a steady flow of money every month, and paying the monthly rent is not an issue for your income/assets.

Anything negative in terms of your financial record will make things difficult for you to rent an apartment or borrow money from an institution. Lack of reliability on your credit or financial report is a legal reason why a lender will ask for a guarantor. A guarantor helps ease your situation by putting forward his or her own financial statement to hedge against unreliable finances on your profile.

Sometimes, a landlord will ask you to bring a guarantor outwardly even if you do not have red flags on your profile. There are different kinds of guarantors.

Types of guarantors

There are many different scenarios in which you would need a guarantor. The scenarios range from helping people overcome the uncertainty of poor credit histories to assisting those who do not have a high enough income to purchase or lease homes. Guarantors don’t necessarily have to be liable for the whole monetary obligation in the deal. Their financial responsibilities depend on their type.

1- Guarantors as certifiers

A guarantor’s role is not just to make your lease or loan easy, but a guarantor can even help you land a new job or help get your important documents like your passport. Their role is not limited to pledging their assets as safety against loss or risk.

When a guarantor is helping to bag a job or get your documents, they act as a certifier who claims to know you personally and will verify identities by confirming photo IDs.

2- Limited vs. unlimited

A guarantor’s role is always defined in the agreement, and it can be either limited or unlimited. In a limited capacity, a guarantor will only extend his guarantee for a specific time period; after the lapse of the time of guarantee, the borrower will fulfill the requirements of the loan alone. Any problems that may come in the way after the ending of the guarantee period will be borne by the borrower alone, and the guarantor will have no responsibilities at all.

A limited guarantor may also be responsible for only a certain percentage of the loan and not the whole amount. On the other hand, Unlimited guarantors are liable for the whole term of the loan. Their guarantee extends to the loan until it is fully reimbursed. They are also liable for the entire amount and not for a certain percentage of the loan, like a limited guarantor.

How to find a guarantor?

The most common way of finding a guarantor is to ask your parents for help. They are the best, most reliable support you can ever get for this purpose. You may not feel very comfortable with this setting, but it’s the easiest to find and the smoothest way to manage when renting an apartment or signing up for any significant financial responsibility.

Having close and trustworthy friends also comes in handy when you are in a fix. Reliable friends mean you will not have a problem asking them to pay your loan or lease when things are going downhill for you.

It is essential to explain to whoever guarantees the loan that the borrower doesn’t necessarily need to default on the loan. Whether the guarantor is one of your parents or a close friend, they should know that they guarantee to assure the lender that his money will be paid back even if the lender lands in issues. Friends and family are the best options for money matters, but it’s always better to explain the situation fully so you can avoid any future inconveniences.

If you don’t have someone close who will be willing to act as your guarantor, then you can buy the service, i.e., to pay a guarantor to act in the said capacity because it is a strict requirement in most cases. The guarantor’s pay can be anywhere between 4% to 10% of the annual rent to be paid. A guarantor service can cost money, so make sure you are comfortable paying it. It can be a long-term affair so make sure to calculate the cost and hire a guarantor only if you are comfortable paying it. If you don’t feel comfortable paying the fee, you might as well drop the idea altogether.

Your potential guarantor must be financially stable, reliable, and trustworthy. You should be comfortable with the person at a personal level. Having an excellent credit history counts. If you know and are close to someone who possesses these characteristics and an excellent credit history, then go ahead and ask that person.

Listing a guarantor is a formal business. There are lots of formalities involved in the procedure. The guarantor will have to submit proof of their income, sign some legal papers and comply with all the other requirements that come with the contract. Your part is to be always on time regarding the payments so that the guarantor does not land in unnecessary issues. If you keep a good record on your first lease, you can have a more manageable situation in all the coming instances.

Alternatives to a guarantor

Although there are quite a few ways of getting a guarantor, it’s not impossible to land in a situation where you need an alternative to a guarantor. Of course, there is the option of hiring your guarantor when there is no one among your friends or relatives to take the responsibility, but that comes with financial bills, which may be an extra load for some. If the fees are a bit too much, most renters will hesitate to pay the extra money for the service, and the guarantor’s service fee will not be a one-time thing. Instead, it will be a long-term commitment.

The best thing to do to avoid the long-term financial responsibility of a guarantor service is to pay extra money upfront. Many landlords are open to this option. If you could afford to pay some extra money in addition to all the necessary fees and rents, perhaps a few months’ rent in advance, your landlord may be happy with this settlement. Some also accept a higher Security fee as an alternative to guarantors’ service.

This is a great way to avoid a long-term responsibility that comes with a formal guarantor. However, this option works only if you have some money saved up in your account.

In general, if you have a good enough and smooth income source, but it’s just your rental history that’s a little offbeat, there are high chances your application will be reviewed positively, and you will be allowed to use alternatives to a guarantor’s service.

However, you may need a guarantor yourself because you do not have the money to pay higher fees or rents in advance. In those cases, use one of the alternatives discussed below.

1- Use a guarantor service

As described above, you can always use a paid guarantor service if things are not working out with friends and family. However, there is a fee attached to this, and it gets a little complicated at times too. You might want to use some other alternatives for some really solid reasons.

2- Present your case well

Your landlord doesn’t know who you are; you are just a file sitting on his desk. He is judging you from your crest history and income sources. If you have bad credit, it’s understandable that they do not find it safe to rent their property to you. If your disapproval is because of reasons other than poor credit, it’s a good idea to meet your landlord in person. When you do that, present yourself well.

Dress up well, be patient and pleasant throughout, present your case in the best possible manner, and there is a good chance your landlord will approve your application. Try and think like your landlord; stand in his shoes and think who you will trust with your property. In the next step, try to be the person you would trust if you were a landlord.

We all want posh, luxurious, high-end apartments with top-notch facilities like a fancy pool and lush grounds. However, you may not be in the position to afford this luxury at all times in life. You may lack the necessary income, or perhaps the credit history is a little off! In any case, if you are thinking big and luxurious, think again.

Renting a high-end apartment will come with many costs, and if your budget is not spacious enough to fit in the responsibilities easily, you might want to think differently. Let go of your expectations and look for smaller apartments with all the basic facilities. You will have a nice place to live in, and there will be no extraordinary financial responsibilities ruining your peace of mind.

Smaller apartment complexes that are locally built and run are easy to rent. These rentals usually have more flexible rules than those high-end, corporate-owned apartment complexes.

3- Pay more upfront

As discussed above, you can save your image by paying a little extra up front. Pay advance rents or deposit a chunkier security fee; you will be safe from the nagging responsibilities and formalities that come with a paid guarantor service. A bigger security fee makes you look safer and more reliable in the eyes of the landlord.

Guarantors are not always necessary, but they are great for those who have poor credit or rental history or even low income. When your rental history or credit score is not up to the mark for a dream apartment rental, you might as well look for a guarantor because they let you live the life you have always dreamed of despite all problems and complications.

Guarantor or cosigner?

You would see many people who use the two terms – cosigner and guarantor interchangeably like they are the same. They are not, though. A cosigner is someone who signs the rental contract with you, just like a guarantor, but his responsibilities and rights under the contract are a lot different.

A cosigner is equally responsible for all the fees and liabilities of the contract and has the right to live in the same apartment as you (the one where he is a cosigner).

In short, a cosigner has more rights under the contract than a guarantor, and he is also responsible for a lot more. Your guarantor is responsible for paying the loan when you default, but a cosigner splits the rent and all fees that are part of the rent. It is like a half n half responsibility between the cosigner and the one who is renting an apartment.

Can there be more than one guarantor?

Usually, you will only see one guarantor on one contract. It’s evident that no landlord likes to go for several tiers of guarantees like if this person defaults, that person will pay, and if that one goes bankrupt, another will be responsible. One person needs one guarantor, and that’s it.

However, in a completely different scenario, when two roommates rent a room or apartment, the landlord may ask for two guarantors. One guarantor may suffice, but both the roommates may have incomes only barely enough to pay the rent. In such a case, the landlord may feel insecure and demand a separate financial guarantee for both the inmates. This way, we will have two guarantors on one deal.

Can your guarantor be out of State or out of the country?

The answer to this question is not standard or set at all. It all depends on the landlord you are dealing with. Generally speaking, a guarantor will always be someone who lives close or at least in the same city and can guarantee prompt delivery of the fees and funds when the need arises. However, in metropolitans, where people come and live from all over the world, things may be a little different.

Think of it like this, if you are in NY and want to rent an apartment, you may have a guarantor like among your friends, but they may not be in New York. How will you proceed with renting an apartment in this condition? The answer is simple; you will ask your landlord! Discuss the matter with him, and you will know the exact answer. Since there are no standards in this case, you will have to ask the man at the helm- the landlord!

Choose wisely

When you are preparing to get an apartment, there are quite a few things up for consideration. You will need to be very careful and choose your options very wisely.

You have two options in front of you; either choose a guarantor or a cosigner. A cosigner will probably be sharing the apartment with you, and the guarantor will only make the landlord’s investment fail-safe with their financial reputation. If you have hired a guarantor, there will be fees involved.

Whoever you choose to lighten the burden of renting an apartment must thoroughly discuss all terms and conditions. Sit them down and explain everything in detail. In most cases, you will find discussions to be exhausting. You may see yourself missing essential points. Simply putting things in front of them can be challenging. The best thing to do is to have a separate agreement signed by them which explains everything articulately and get their consent formally.

You must keep in mind that once a person becomes your guarantor or even your cosigner, your relationship with them will change forever. It will not be a harmless friendship anymore. Money will enter the equation, and things will get complicated. You are advised to choose your guarantor or cosigner very wisely; do not choose people who are too dear to your heart among your friends. Choose the loyal, old, and trustworthy friends, but not the ones with whom you have any pretenses to manage.


Renting an apartment for yourself may be a piece of cake outwardly, but it involves quite a few formalities. Too many for newbies’ taste, actually! It is a complicated business in general, but it’s particularly hard for those doing it for the first time. Being a guarantor ensures financial responsibilities- the person will have to pay the loan, lease, or rent if the main signee of the contract defaults. Due to the involvement of a huge financial responsibility, a guarantor is always meticulous. It may not be easy to bring him around. It will be quite a task to have someone who will even agree to be the guarantor. There are quite a few options if you do not find someone among family and friends.

Whether you hire a guarantor or find someone among your loved ones, you need to be careful, honest, direct, meticulous, and responsible for your part so that no one has to go through problems because of you.

The fact that you have a guarantor does not mean you must default on your loan; try your best to avoid such a situation under any circumstances.

Charles Bains

Charles Bains

Charles Bains started his insurance career as a marketing intern before pounding the pavement as a commercial lines agent in Orlando, FL. As an industry journalist, his articles have appeared in a variety of trade publications. His insurance television career, short-lived but glorious, once saw him serve as the expert adviser on an insurance-themed infomercial (yes, you read that correctly). Having recently worked for various organizations, coupled with his broader insurance knowledge, Charles is able to understand our client’s needs and guide them accordingly. He is a gem for Insurance Noon as his wide area of expertise and experience have been beneficial in conducting further researches to come up with solutions and writing them in a manner which is easy for everyone including beginners to comprehend.

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