A guarantor is an individual or business that contractually guarantees the promise of another called the promisor
If the promisor does not fulfill the promise, the guarantor will be held legally responsible for the default. In large business transactions, the guarantor will usually request the borrower to purchase a performance bond in case of default.
More commonly, the guarantor is a parent who has agreed to co-sign an installment contract for the son or daughter to purchase their first new car.
Should the son or daughter default on the car loan, the lender will likely also sue the co-signing parent as well as the child, both of whom are jointly liable for the debt.
Should there be a default on the loan, the guarantor can be sued by the creditor directly or through a collection agency. Should this happen, it will likely have a negative impact on the creditworthiness of the guarantor.
