Everything You Need to Know About Guarantors
What is a guarantor? A guarantor can be an important part of the renting process, especially for people like college students. Renting to those without can be risky, especially if they are students or have a low credit.
What is a Guarantor?
A guarantor is someone who signs onto the lease but is not living in the property. They are usually also not paying for the rental but if the tenant fails to make a full payment, they will put up the amount owed.
Depending on the lease, they may not be liable for the full amount or a partial amount. This is commonly referred to as limited versus unlimited guarantors.
Guarantors are commonly seen with college students, as parents often sign in case the student can’t make a full payment. This does not always need to be the case, guarantors can be anyone—friend or family.
Requiring a guarantor for potential tenants with poor credit, no credit history, or low income can be a good idea. If a potential tenant has trouble locating a guarantor, there are 3rd party services that can provide these services.
To decide if requiring a guarantor is right for you visit this blog post.
Guarantor Meaning
When asking what is a guarantor, it’s important to remember it isn’t an exclusive term to rental contracts. It is very common, especially in banking. Across all of where it is used, it is always meant to be someone who can guarantee the completion of the contract.
What this means is that the financial supporter puts up their own assets to ensure that payments are made. This is common practice for loans and in renting it is used in the same way. If all goes smoothly, the guarantor won’t pay a penny. However, if the signee (or tenant renting) falls short of making a payment the guarantor is on the hook.
What is a Cosigner?
What is a guarantor vs what is a cosigner? A cosigner is similar in that another person is signing onto the lease. The difference is that the cosigner is allowed to live in the rental property as an equal. They are also, in most cases, expected to pay their share of the rent every month.
Rent is typically split between all signers of the lease. For example, say a two-bedroom apartment goes for $2,000 dollars, the cosigner is expected for $1,000 however, the full $2,000 still needs to be paid. If one tenant fails to pay his share of the rent, the cosigner is liable for that portion as well.
If you need help deciding to include a guarantor or co-signer for your apartment, visit this link.
Conclusion
Guarantors are there to help you feel more secure about the tenants that you lease to. Especially if you are leasing to risky tenants like students or those with poor credit, requiring guarantors will take the worry out of leasing.