When you're looking to rent a new apartment, you'll need to think about the financial responsibilities required, in addition to choosing the perfect location and apartment complex with amenities. If you're hoping to rent an apartment but don't quite qualify for the lease, don't stress just yet! You may consider having a guarantor or co-signer help you out.
While these two terms are often used interchangeably, there are unique differences between the two roles.
A guarantor is a person, usually a friend or family member, who's willing to sign the lease with you and assume financial responsibility should you become unable to pay your rent, rental fees or damages. Guarantors sign the lease and are responsible for the payments under the law, but they don't occupy the apartment nor are they entitled to occupy it.
Just like the word implies, a guarantor guarantees that they'll help cover the monthly rental fees if you fall short or behind on payments. In some cases, landlords won't let you rent or sign the lease unless you have a guarantor.
Guarantors help landlords feel more secure in their decision to rent an apartment to renters with low income, poor credit scores or lack of rental history. It provides a safety net for apartment managers because they know they'll get their money from you or the guarantor legally. Most landlords will have strict guidelines for guarantors to ensure they have a steady income and stellar credit.
Like a guarantor, a co-signer is a second person who signs the lease to help assume financial responsibility. However, a co-signer has more rights under the lease and can live in the apartment as a tenant.
Both parties sign the lease, are entitled to live in the apartment and are equally responsible for splitting the rent and fees and making on-time monthly payments.
You may consider a co-signer vs. a guarantor if you have a roommate in mind who's looking to share a space. Co-signers can help you secure a lease while also helping save money because you're splitting the rent equally. A guarantor is a good option when you're looking to live alone or don't want a roommate but need someone to back you up financially in order to obtain the lease.
Both guarantors and co-signers have legal obligations once they've signed the lease. Because these roles involve finances, it's crucial for everyone to understand their obligations and ensure everyone is on the same page before they sign the lease. Otherwise, it can cause a strain on the relationship and lead to uncomfortable situations.
When choosing a co-signer or guarantor, you'll want to consider a few things:
Before you ask someone to be your guarantor or co-signer, assess their financial health to ensure they actually could support you and take on your payments should something come up. If they can't, they probably aren't a good fit for this role.
Just because someone is financially able to help you doesn't mean they're comfortable with the situation. You need to ensure your guarantor or co-signer and you have had a candid conversation about expectations and arrangements. Otherwise, you're setting yourself up for an uncomfortable relationship.
By understanding the nuances between each role, you'll be able to make a better decision when it comes time to sign a lease. Both guarantors or co-signers can be a financial lifesaver but it's important to know the difference so everyone knows their rights and responsibilities under the law.
