guarantor

  

Definition

Person or firm that endorses a three party agreement to guarantee that promises made by the first party (the principal) to the second party (client or lender) will be fulfilled, and assumes liability if the principal fails to fulfill them (defaults). In case of a default, the guarantor must compensate the lender or client, and usually acquires an immediate right of action against the principal for payments made under the guarantee.

Use guarantor in a sentence

  • The student had a difficult time borrowing money because of her lack of credit, so her father agreed to be the guarantor to help secure a bank's loan.

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