A complete guide to guarantors vs cosigners
Are you ready for a new rental apartment? Here’s how to rent with a supporting tenant like a guarantor or cosigner.
If you’re in the market for a new home, you’re likely exploring a range of options. You might even be considering asking for help from family or a friend with securing a rental. This is what leaves people wondering about guarantors vs cosigners.
At first blush, it may seem simpler to rent an apartment rather than go through the exhaustive process of purchasing a home.
After all, with a rental, you only need to worry about finding a place you like and then paying rent.
In order to buy a home, you not only have to consider where you want to live permanently, but you also have to deal with details like inspections, bids and applying for a mortgage.
So it’s always simpler to rent, right?
The answer is yes, with some caveats.
If you are renting in a different country, or are not a high earner, you may be asked to use a guarantor or cosigner when you sign a lease.
Of course, you can avoid these complications completely if you opt for a flexible furnished rental apartment from Blueground. Our apartments never require our guests to use a guarantor or cosigner!
Read on to find out whether you need a lease guarantor vs a cosigner, as well as why you might need one to rent an apartment.
Who is a guarantor?
Simply put, a guarantor is someone who agrees to pay your rent in the event that you fall behind on payments to your landlord.
A guarantor can be just about anyone in your life who can assume the necessary financial responsibility, whether it’s one of your parents or another family member, your employer, or even a friend.
It’s important to note that a guarantor is not considered a tenant!
As far as your landlord is concerned, a guarantor is simply a person who will settle your overdue rent and has no right to actually occupy the rental space.
A guarantor can also be responsible for damages to the home after the tenant moves out.
Who is a cosigner?
As with a guarantor, almost anyone can be a cosigner, whether it’s a partner, roommate, family member, or even a complete stranger. (It’s always wise to do a background case if you decide to join forces with someone you don’t know!)
A cosigner of an apartment lease is essentially an additional tenant — even if they already live somewhere else.
If you are looking for a cosigner to rent an apartment, you need someone who can assume financial responsibility for a portion of the rent. You and your cosigner are both parties to the lease, and your cosigner is entitled to live on the premises and is considered a tenant.
What’s the difference between a guarantor vs a cosigner?
The biggest distinction between a cosigner vs a guarantor is that by the terms of the lease a cosigner is entitled to live in the home, while a guarantor is not.
A cosigner is essentially a roommate and has equal rights to the space as other tenants.
A guarantor, on the other hand, assumes financial responsibility for the lease agreement but doesn’t live in the home or have the right to occupy the space — even if the original tenant fails to pay rent!
Another important consideration about guarantors vs cosigners for apartments is that a cosigner is responsible for paying deposits ahead of move-in and periodic rent payments.
A guarantor, on the other hand, would only pay the landlord if the tenant fails to do so.
This is the biggest distinction for a guarantor vs cosigner.
Why is a guarantor or a cosigner necessary?
There are a number of circumstances where a guarantor or cosigner is essential to securing a new apartment lease. Some landlords simply require a guarantor or cosigner no matter what, while others may only require a guarantor or cosigner under special circumstances.
Generally, a guarantor or cosigner is necessary when the tenant cannot demonstrate their ability to meet rent payments.
A common example of this is a student, who generally cannot pay rent without assistance from loans or their parents. Many student apartments will either require several students who live together as cosigners or that one of the student’s parents agrees to be a guarantor.
There’s no reason to worry if you don’t have the financial resources to rent an apartment on your own and need to rely on a guarantor or cosigner.
However, it’s important to make sure that the other party understands the full extent of their financial obligations before any documents are signed!
Even if your guarantor or cosigner is someone you know well, money can change even the closest of relationships. Be sure to consider the potential impact of any financial outlay on the ongoing relationship you have with your cosigner or guarantor.
When should a landlord require a cosigner or guarantor?
We have considered the issue of cosigners vs guarantors for an apartment from the tenant’s perspective.
But it’s also important to think about the circumstances where it’s to a landlord’s benefit to require a cosigner or guarantor.
Here are some examples of reasons that landlords require cosigners and guarantors.
Standard rental policy
Believe it or not, there are plenty of landlords out there who will require renters to have a cosigner or a guarantor no matter what!
While this sort of policy is unusual, it’s not unheard of, especially for smaller buildings or new construction. Be sure to ask any potential landlord whether you will be required to have a cosigner or guarantor when you first view a potential rental apartment.
If you have a low income, or even earn under a certain threshold that the landlord establishes, you may need a cosigner or a guarantor.
If you are looking at apartments a little over your budget, be prepared for some pushback from a potential landlord.
However, if you have substantial savings or an alternative source of income you may be able to persuade a landlord to overlook their preference that you have a cosigner or guarantor by offering to pay several months of rent upfront.
Low credit score or unestablished credit history
Even if you’re earning a high salary, there are certain circumstances where a landlord might still require a cosigner or a guarantor.
In the US, for example, a low credit score can signal to a landlord that you are a risky bet.
From a landlord’s perspective, your ability to pay bills promptly when they are due is just as important as whether or not you have the financial means to do so.
Similarly, someone with an unestablished credit history, like a recent graduate or ex-pat, could also have trouble signing a lease without a guarantor or cosigner.
A landlord needs to feel confident that their tenant has the responsibility and understanding to make regular, on-time rent payments.
If you don’t have a long credit history, don’t be offended if a potential landlord asks you to use a cosigner or guarantor.
No rental history
If you have never rented an apartment before, you may need to consider a cosigner or guarantor.
One of the most important things any potential landlord considers is references from previous landlords, after all. It’s not uncommon for first-time renters to either live with roommates — a.k.a. cosigners — or ask someone with more financial means to act as a guarantor.
In a competitive rental market, it’s especially important for first-time renters to have a cosigner or guarantor already in mind before viewing any apartments.
After all, you don’t want to miss out on a great place because someone else was smart enough to show up with all of their documents ready!
Do property owners prioritize cosigners or guarantors?
The truth of the matter is, landlords often show a preference for potential tenants who use cosigners or guarantors.
After all, their most important consideration is whether you can pay your rent and whether you will do so on time.
When you use a cosigner, both parties are equally responsible for paying rent, so a landlord can demand the full rent even if one tenant hasn’t paid their share.
Similarly, when you use a guarantor, a landlord can rest assured that this third party will pay any outstanding rent or charges for damages in full, even if the original tenant is unable to meet these financial responsibilities.
In conclusion, using a cosigner or a guarantor can be a big advantage for renters in a tight housing market!
Now that you understand the difference between a cosigner and a guarantor, as well as some of the reasons why a landlord might require you to use one, you are armed with powerful information that will help you find a new home that fits your budget and needs.
Just be sure that you are upfront with any potential landlords about your ability to augment your rental payments by using a cosigner or a guarantor so that you don’t miss out on a great apartment because someone else was faster.
It may have not been your “plan” to live with a roommate or ask someone in your life to be your financial guarantor, but this sacrifice is worth it for an apartment you love.
Just make sure you understand the distinctions of a guarantor vs cosigner before you ask anyone for help.
Bottom line, there are a variety of circumstances where a landlord will benefit by requiring a cosigner or guarantor, so if you prepare in advance you will be well on the way to securing the apartment of your dreams. Of course, opting for a furnished rental lets you skip finding a guarantor!