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Loan Guarantor Explained – Responsibilities & Risks
Reviewed by: Fibe Research Team
- Updated on: 15 Sep 2025
Reviewed by: Fibe Research Team
When applying for a loan, one common question borrowers have is: ‘Can I still get approval if my credit score is low or my income is insufficient?’ This is where a loan guarantor plays an important role. A guarantor increases your chances of getting loan approval because lenders feel more secure about repayment.
If your credit history is weak or you’re just starting to build one, involving a guarantor reduces the risk for the lender. As a result, you can access funds more easily, even in the form of an instant loan with guarantor support.
So, what is guarantor in loan? In simple words, a loan guarantor meaning refers to a person who agrees to take responsibility for repaying a borrower’s loan if the borrower fails to do so. This individual acts as a financial safety net for lenders.
A guarantor is generally required to meet specific eligibility conditions such as:
Usually, a guarantor must be 21 years or above and can be a family member, spouse, sibling, or even a close family friend. In any case, the guarantor must have a clean credit record and should be willing to accept this responsibility.
Here are a few cases where lenders may ask for a personal loan guarantor:
In such cases, a bank loan guarantor helps bridge the gap and assures the lender of repayment.
Here are the main responsibilities:
The presence of a guarantor significantly influences loan approval and repayment security. Here’s why guarantors are important:
| Pros | Cons |
|---|---|
| Helps the borrower get a loan even if they don’t meet eligibility. | Guarantor becomes responsible for repayment if the borrower defaults. |
| Improves chances of securing funds on better terms (lower interest, etc.) | Guarantor’s credit score may be negatively impacted if repayment is delayed. |
| Enables the borrower to access a higher loan amount. | Guarantor may face difficulty in availing another loan during the tenure. |
| Offers borrower a chance to improve credit score. | Once given, a guarantee cannot be withdrawn or cancelled. |
There are generally two types of guarantors:
Example: A father acting as a guarantor for his son’s personal loan.
Example: An employer confirming the employee’s stability and background.
Many people confuse a guarantor with a co-signer, but they’re not the same:
Example: If you take a personal loan guarantor for approval, they step in only if you fail. But if you add a co-signer, the loan reflects on both credit reports from the start.
Collateral is an asset pledged by the borrower to secure a loan. While not always linked to guarantors, lenders may ask for either collateral or a guarantor when risk is high. In unsecured loans (like most personal loans), having a guarantor works as a substitute for collateral.
Here are some essential tips that a loan guarantor must keep in mind:
Consider these points before becoming a guarantor:
With this information, you can involve a loan guarantor in your application and get funding easily. Remember, choosing a suitable lender is important.
Fibe is one such lender offering Online Personal Loans of up to ₹5 lakhs at affordable rates. You can repay the loan conveniently over 36 months through EMIs. Download the Personal Loan App or log in to our website to apply.
Here are some risks:
No, once an individual becomes a guarantor, they can’t be removed.
The RBI allows financial institutions to set their own guidelines in case any borrower requires a guarantor. The lender gauges the following parameters before approving any applicant as a guarantor:
