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What is a guarantor?

A guarantor is a person who agrees to be responsible for the debt of another person.

Being a guarantor is a serious obligation. If the borrower fails to meet their payment commitments under a credit contract, the guarantor may be required to pay the debt, or the lender may be able to seize (“repossess”) and sell any property that the guarantor has put up as security for the debt (see “Repossession” in this chapter).

Contract and Commercial Act 2017, s 102

Lenders may insist on a guarantor if, for example, the borrower:

  • presents an unacceptable credit risk, or
  • doesn’t meet the lender’s lending criteria, or
  • is under 18 years old (see “Legal ages” on the Youthlaw website:
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