When a borrower fails on a loan, the lender can seize the guarantee’s assets and use the proceeds to pay off the defaulted loan. A guarantor should have an excellent credit history and earn enough money to cover the loan payments. In addition, the guarantor could be responsible for paying any accrued interest or penalties if the borrower repeatedly pays late.
A guarantor could be useful in a wide variety of contexts. This can involve helping folks with low incomes or those with weak credit scores. A guarantor need not be financially responsible for the total monetary obligation stated in the guarantee.