A guarantor is someone who agrees to take on the responsibility of repaying a loan if the original borrower fails to make payments, essentially providing the lender with extra assurance and security. Unlike a co-applicant, a guarantor typically isn't a co-owner of the asset being financed and doesn't receive any ownership rights — their role is purely to backstop the loan if things go wrong.
Being a guarantor is a significant financial and legal commitment, since your own credit score and financial standing can be affected if the primary borrower defaults, even though you never actually took the loan or benefited from it. Lenders sometimes require a guarantor when the primary borrower's income, credit history, or collateral alone isn't considered sufficient to approve the loan on its own.
Given the risk involved, it's wise to only agree to be a guarantor after fully understanding the loan terms and being genuinely confident in the primary borrower's ability to repay.