Don't Be a Sucker: The Truth About Guarantor and Cosigner Agreements
There are significant financial and relationship risks involved if you agree to be a cosigner or guarantor. Make sure you perform your due diligence, and know exactly what you're getting into, before agreeing to such a commitment.


Most people understand the risks of being a cosigner for a car purchase or lease. But how should you reply if a good friend or a close family member says, "Will you please be my guarantor — not cosigner, just a guarantor — for the apartment I would like to lease?"
Is there a difference?
"Mr. Beaver," "Nick" began in his phone call, "I've read your column for years and need some guidance. My nephew, 'Mitch,' is 42 and has a horrible credit score. He had difficulty in the past paying bills on time, but recently cleaned up his act, has a good job and steady relationship and appears to be on the right financial path.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.

Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
"He wants to rent an apartment for himself and his girlfriend. Both of them work and have good incomes. He was told to find a 'guarantor,' or the management company would not lease him the apartment.
"I am being somewhat pressured by family to take on that role, and they tell me that, at most, I would be responsible for one month's rent if he defaults, and then I could walk away. I can live with that — but is it correct? Is there a difference between a cosigner and guarantor on a lease?"
Kiplinger's Adviser Intel, formerly known as Building Wealth, is a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.
What Nick did not know about his nephew?
I said, "Nick, let's do some due diligence research on Mitch right now. If he's been sued or has gotten in trouble criminally, it will be on the Superior Court Civil and Criminal Filings index, so turn on your computer."
We found many entries about Mitch — two bankruptcies, lawsuits and judgments against him going back years, several because this jerk pays rent for a month and then stops, becoming a squatter.
He has written checks galore on closed accounts, and his name appears on the Criminal Register, which shows that he did time in the slammer for the bad checks —which Nick knew nothing about.
"Yeah, I see all that," Nick said, "but I still feel almost forced to help the kid." That history should have scared the pants off of him.
"Nick, he's no kid. He is trouble, so let me fill you in on the nonsense you were given about being liable for only one month's rent as a guarantor."
There are differences
I explained to Nick that a cosigner has equal responsibility for the rent or other financial obligations, and this begins when the agreement (lease or purchase contract) is signed. With a lease, cosigners are considered to be tenants and may live in the property.
A guarantor might sign a separate agreement, assuming responsibility for the debt only if the primary borrower defaults. They do not have the right to occupy the property. So, at first glance, it might appear that serving as a guarantor is fairly safe — the financial exposure is much less than that of a cosigner.
That said, it is very common for real property leases to make a guarantor's legal obligations virtually identical to those of a cosigner. In my experience, if a guarantor rejects those terms, property managers will pull the plug on the entire transaction. It becomes a take-it-or-leave-it situation.
Think before being pressured into being generous
"Nick," I said, "we all need to get real — very real — and ask ourselves the following questions when someone requests us to cosign or become a guarantor, especially if the person has already proven themselves to be an irresponsible flake or are at the beginning of a romantic relationship."
- Why do they need my help?
- Are they, or other family members, putting a guilt trip on me?
- What did they do to put themselves in a position of needing a cosigner or guarantor?
- Will they hit up someone else if I refuse? (They will.)
You should also accept that you are not this person's guardian angel — they will survive without your help.
Why would you accept the significant financial risks that will likely impact your credit and mental well-being when — not if, but when — they default and you wind up getting sued for their debt?
Consequences at home: Relationship strain
Mixing finances with personal relationships often guarantees embarrassment, feelings of betrayal and the loss of trust when the borrower fails to follow through on promises.
It's even worse if the borrower defaults on the loan and makes no effort to protect the generous family member who was there when needed — sometimes the borrower will even blame the cosigner for having the nerve to insist they repay their debt.
Looking for expert tips to grow and preserve your wealth? Sign up for Adviser Intel (formerly known as Building Wealth), our free, twice-weekly newsletter.
Even if the borrower is financially responsible, cosigning is a significant financial risk. If you are not comfortable with it, decline.
The bottom line is that cosigning or guaranteeing any financial transaction is a major commitment with real consequences. Seriously consider it only if you have absolute confidence in the borrower's ability to repay and can answer yes to this question: Can you accept the potential risks to your own well-being and that of your family?
Finally, in a dating relationship, realize there are cons by the bushel who "just need a little help" in getting into that apartment or buying a car. Refuse.
When they say, "If you really loved me, you would help, but I guess you don't," you can think to yourself, "That's right! I don't have 'sucker' stamped on my forehead!"
Dennis Beaver practices law in Bakersfield, Calif., and welcomes comments and questions from readers, which may be faxed to (661) 323-7993, or e-mailed to Lagombeaver1@gmail.com. And be sure to visit dennisbeaver.com.
Related Content
- Six Things Not to Do if You Want to Resolve a Conflict
- The Truth About the Dark Side of Rooftop Solar Panels
- Why Can't You Ever Use Your Timeshare?
- From Dream Apartment to Nightmare: When Your Landlord Evicts You Through No Fault of Your Own
- Are You a Doormat at Work? The Hidden Cost of Excessive People-Pleasing
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

After attending Loyola University School of Law, H. Dennis Beaver joined California's Kern County District Attorney's Office, where he established a Consumer Fraud section. He is in the general practice of law and writes a syndicated newspaper column, "You and the Law." Through his column, he offers readers in need of down-to-earth advice his help free of charge. "I know it sounds corny, but I just love to be able to use my education and experience to help, simply to help. When a reader contacts me, it is a gift."
-
Five Ways to Cash In On the $6,000 'Senior Bonus' Deduction
Taxpayers aged 65 and older may be able to benefit from a $6,000 'senior bonus' deduction over the next four tax years. Here are five ways to make it pay.
-
Are AI Search Results Ghosting Your LinkedIn Posts? This Could Be Why
Posts generated by AI don't hold enough authority with AI search engines to significantly boost your visibility (yes, that's ironic!). Here's what you can do instead.
-
Are AI Search Results Ghosting Your LinkedIn Posts? This Could Be Why
Posts generated by AI don't hold enough authority with AI search engines to significantly boost your visibility (yes, that's ironic!). Here's what you can do instead.
-
Student Loan Shake-Up: What the OBBB Means for Parent PLUS Borrowers, From a Financial Aid Expert
For students starting a new program on/after July 1, 2026, loans will be capped at $20,000 annually, and parents can borrow no more than $65,000 total, a big change from the unlimited borrowing setup.
-
Boomer Retirement Reality Check: The Numbers Look Bleak, But Here's What You Can Do About That
Your retirement probably won't look like your parents' retirement, thanks in part to rising costs . Here are some ways to assess your finances to get yourself into a better financial position.
-
Should You Be an Active or Passive Investor? A Financial Adviser Breaks It All Down
Understanding the pros and cons of the two types of investing strategies can clarify what works for you. Hint: Sometimes a blend is best.
-
Playing Defense Pays Off for Our Favorite Junk Bond Fund
Defensive sectors weathered the April selloff well, which helped the Vanguard High-Yield Corporate outpace its peers.
-
My First $1 Million: Health Care CFO, 52, Pacific Northwest
Ever wonder how someone who's made a million dollars or more did it? Kiplinger's My First $1 Million series uncovers the answers.
-
I'm a Financial Adviser: Don't Believe These Five Myths About Annuities
Annuities can offer financial stability that can be quite freeing for retirees. Don't let a few myths spoil what might be a good thing for you.
-
I'm a Wealth Adviser: This Is How to Prevent Your Heirs From Frittering Away the Family Fortune
To prevent family wealth from being eroded down the line, younger generations must be treated as active stewards of a legacy rather than passive heirs.