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Guarantee

Discussion in 'Investing Glossary' started by Glossary, 27th Sep, 2006.

  1. Glossary

    Glossary Active Member

    Joined:
    12th Sep, 2006
    Posts:
    25
    Definition:

    A guarantee is a binding promise of one person (the Guarantor) to be answerable to another (typically called the creditor) for the debt or other obligations of a third person (usually called the Principal Debtor) if the Principal Debtor defaults.

    If a friend or relative asks you to "go guarantor" for them run for the hills - as guarantor, you take on all their risk and responsibility with none of the rewards.