Question

If you were to loan someone $100,000.00, would you rather require that they obtain someone to serve as a surety or someone to serve as a guarantor? Consider and discuss.

Answer 1

I would go with someone to serve as surety rather going as a guarantor. At the time of default, both the surety and the guarantor plays the same role. But a surety is given with the original contract and liable to pay at the moment the borrower denies. A guarantor pays after the default. Apart from that, the lender may have to inform the guarantor and incur several expenses. In case of guarantor, the lender has to take the burden of getting the amount recovered, but in the case of surety, there is no such burden. This is why for a lender; a surety is better than a guarantor.

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