What is a Guarantor?

This post, "What is a Guarantor for an Apartment?," was originally published on the Apartments.com Renterverse in 2019. 

A guarantor, or cosigner, is someone who takes legal responsibility for another person’s financial debt. In the case of an apartment, a guarantor agrees to pay the rent if the tenant is unable to do so. In this article, we explore what a guarantor does, when you might need one, and how to find a guarantor for your apartment. 

There are a few boxes you have to check off throughout the apartment renting journey, and you may find that you need a little assistance getting those checkmarks. After you’ve found that perfect apartment, let’s call it “the one,” your next step is to put in an application and hope that it’s approved, but what if it’s not?

For instance, if you’re a first-time renter without credit or a longtime renter who lacks employment stability, you may not be approved instantly for a new apartment simply because you’re missing a few marks. But don’t worry; there are options if you don’t have enough financial proof to appease the property manager or landlord. If you can’t get approved on your own for a lease, the property manager or landlord may suggest that you get a guarantor to sign the lease with you. But what is a guarantor and how can they help?

WHAT IS A GUARANTOR?

A guarantor is another word for cosigner, and by definition, a guarantor is someone who guarantees to be legally responsible for paying the rent as stipulated by the lease, but only if the tenant cannot pay for one reason or another. A guarantor guarantees payment – pretty easy to remember, right? The guarantor signs the lease with the tenant and stands as reassurance to the property manager or landlord that rent will be paid if you (the tenant) default on payment. A guarantor is not always necessary, but there are circumstances when renters rely on them to be approved for an apartment. 

WHY AND WHEN YOU WILL NEED A GUARANTOR

There are a few scenarios that may lead you to getting a guarantor. Imagine that you’ve finally found your dream apartment, but the property manager or landlord finds a few red flags while reviewing your rental application. It’s possible that he/she may see that:

• You have a bad credit score.
• You’re lacking credit of any kind.
• You have a bankruptcy on your credit report.
• You have an eviction on your rental history.
• Your employment history is unreliable.
• Your proof of income does not meet the standard (usually 3x the rent).

Anything negative (usually based on finances or reliability) that may keep you from being an ideal candidate is a legitimate reason for needing a guarantor. However, you’ll only need a guarantor to sign the lease with you if the property manager or landlord of that apartment tells you that you must secure one in order to be approved. Otherwise, after you’ve been approved, you can go on your jolly way and sign the lease, agreeing to be fully responsible for paying the rent and any other additional fees on time every month.

HOW TO FIND A GUARANTOR

A relatively standard way of getting a guarantor is to ask your parents. It may not be the most ideal situation for you, but it’s the most common scenario for newer renters in search of a guarantor. Close friends or family members are also good options, but you have to be sure that you’re comfortable asking this person to take financial responsibility for your rent if you default on payment. That’s a lot to ask, so be sure you’re prepared before you ask this financially focused favor of someone.

Though parents are the most likely option, it’s still a good idea to state your case to your potential guarantor as to why they can trust that you will not default on payment. You need a guarantor in this situation simply as backup for the property manager or landlord to assure them that they will get that rent payment one way or another. But that doesn’t mean that you will actually default in paying your rent – so prove that to your parents, family member, friend – whoever it may be.

If you don’t have someone close to you who is willing to cosign with you, then you can actually pay a guarantor service to sign with you instead. However, you’ll have to pay additional fees for this service. Typically, the tenant will pay the guarantor service anywhere from 4% to 10% of the annual rent for their services. If your rent is $2,000 a month for a 12-month lease with a 6% rate, then you’ll be responsible for one payment of $1,440 (typically upfront before the lease signing). But if you’re uneasy about having to pay for a guarantor, then a guarantor service probably isn’t your best bet.

Your potential guarantor needs to be financially stable, responsible, and trustworthy (while also having great credit). If you know of someone like this who you have a strong relationship with, then it’s in your best interest to ask that person. They’ll also have to sign paperwork, submit proof of income, and comply with other requirements. Just be sure that you are willing to be as stable, responsible, and trustworthy in your promise to your guarantor that you will always pay your rent on time (so they don’t have to pick up the slack).

ALTERNATIVES TO GETTING A GUARANTOR

You may find yourself in a situation where you have no personal options for a guarantor, and you don’t feel comfortable using a guarantor service. If this sounds familiar, then you have another option (depending on the property manager or landlord, of course)! Typically, the property manager or landlord will accept additional payment (along with your move-in fees) as a form of assurance or proof that you’re a reliable tenant. This payment could be in the form of a higher security deposit or a few months’ rent in advance.

Some property managers and landlords are more willing to work with you than others. It depends on the management, the cost of rent, and how your application review goes. If your credit score is okay and your rental history is open for discussion, then it’s more likely that you won’t have to get a guarantor. You should always make sure that you can afford to rent the apartment you are applying for, but if you don’t meet the necessary requirements (such as good credit) in order to rent the apartment, then getting a guarantor is a great option! Best of luck, my fellow renters.

Published July 25, 2019

ABOUT THE AUTHOR

Hi, I'm Megan Bullock, a seasoned writer with years of experience in both sides of the rental industry. I focus on answering your questions about renting, as well as property ownership and management, in the hopes of making life as a renter or a landlord a bit easier.