- An agreement for another person to take responsibility for a debt in the event that the borrower defaults. The use of a guarantor gives the lender a level of protection from a borrower who becomes delinquent in his or her payments. Also known as "surety" or "surety bond."
surety bond, surety
Related Terms and Acronyms
- Bad Credit Loan — Definition,
- A loan taken out by someone with bad credit.
- Borrower — Definition,
- A person who borrows money or obtains a loan.
- Co-signer — Definition,
- A person who signs a promissory note that is also signed by one or more other parties. All parties take responsibility for the debt if any of the others renege.
- Credit Risk — Definition,
- The risk of loss assumed under a financial contract that a borrower or a counter-party to a loan or other credit-related contract may default or fail to fulfill its obligations.
- Default — Definition,
- When a borrower fails to fulfill the obligations of a loan or lease.
- Delinquency — Definition,
- Failure to make mortgage payments when mortgage payments are due.
- Lender — Definition,
- The bank or mortgage company offering the loan.
- Loan — Definition,
- Letting another party use something of value temporarily.
- Mortgage (mtg) — Abbreviation, Important,
- A mortgage is a contract stipulating a specific real property, typically a residence or building, as collateral for a loan. The mortgage incurs a rate of interest that varies according to term and other features.
- Sub-prime Borrower — Definition,
- A borrower with a less-than-perfect credit report due to late payments or a default on debt payments.