The Responsibilities of Guarantors
When applicants apply for loans or housing, the company to which they apply typically requires good credit and a steady source of income before it approves the application. If the applicant does not meet a qualification requirement, some companies allow guarantors to back the applicant's contract as a form of insurance.
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Income Proof
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Guarantors are responsible for providing proof of income to the management company or organization that requests the information. The guarantor's proof of income shows the company that the guarantor has the money necessary to back the primary applicant in the event of financial problems. For example, an apartment complex might require that the guarantor earn three times the monthly rent of the unit. Proof of income can come from bank statements or check stubs from the guarantor's employer.
Other Qualifications
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Depending on the company, guarantors might need to provide a credit report and attend an application interview in order for the company to accept the primary applicant. Real estate management offices, bank lenders and other institutions that require guarantors must verify that the guarantor has a history of repayment of debt. For example, if the guarantor has other credit cards or loans, the company will look at the guarantor's credit report to see that the debts are repaid on time. Additionally, some lenders might ask to meet with the guarantor for an interview in which the lender examines the character of the guarantor.
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Paperwork
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Guarantors are responsible for any paperwork that the lender or management company requires before the primary applicant is accepted. Paperwork typically includes a document that seeks the guarantor's contact information, bank account information, Social Security number and any other requested documents. If the guarantor does not live in the same city as the company requesting the documents, it is the guarantor's responsibility to fax or email the documents.
Financial Consequences
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Guarantors are responsible for taking over the financial obligations of the primary applicant, if the applicant can no longer make payments. For example, if the primary applicant signs a 12-month lease for an apartment and cannot make the payments for the apartment after three months, the guarantor is responsible for the remaining nine payments. If the guarantor chooses not to pay for the primary applicant's financial obligations, the guarantor could face credit problems and judgments in civil court.
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References
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