What is a Cosigner?
A cosigner is a person who signs a lease with you and promises to pay the rent if you are unable to. Cosigners are treated as additional tenants, even if only on paper. Together with the tenant, a cosigner must sign the lease before they are legally permitted to live in the rental property. This individual is also prepared to share the tenant’s financial obligations, such as any possible fines, unpaid rent, or property damage. A cosigner generally has better credit than the renter and a higher income because they must show an income of at least six times the rent in order to qualify. For a young or first-time renter, a co-signer can make the qualification process for a rental home much simpler.
What is a Guarantor?
A guarantor, as opposed to a cosigner, promises to cover your rent obligations only in the event that you are unable to. A guarantor is not regarded as a tenant and does not have the same privileges as a co-signer. A guarantor can be viewed as a financial backup plan in the event that the tenant is unable to fulfill their financial obligations. Like a co-signer, a guarantor must show income that is at least 6 times the monthly rent.
Key Differences
The primary distinction between a cosigner and a guarantor is that a cosigner is legally accountable for the rental property, whereas a guarantor is only financially liable. A guarantor assumes financial responsibility if the tenant fails to pay rent or repair property damage. A cosigner, on the other hand, is liable for the rent whether or not the tenant does.
Why You Might Need a Cosigner or Guarantor
There are a few situations where a cosigner or guarantor may be required. Perhaps you’re new to renting and haven’t built up any credit yet. Or perhaps you’ve experienced financial difficulties and your credit has suffered as a result. If you cannot qualify for an apartment on your own, you might have to request a friend or family member for assistance.
How to Ask Someone to Help
It’s important to be upfront about your financial situation when asking someone to cosign or serve as your guarantor. Clarify why you require their support and what their role would be if you were unable to pay your rent. You should also provide pertinent documentation, such as your lease or income verification. Lastly, let them know that if you are unable to pay your rent, they may be held accountable. Because of this, it’s best to select a reliable and financially secure person.
It’s a big decision to ask someone to cosign or be a guarantor of your loan. The right person, however, will be delighted to assist you if you are truthful about your financial situation and outline the risks involved. If you have additional inquiries, please contact one of our Dartmouth property managers.
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