Posted Sep 22, 2014
First Time Renters: What is a Guarantor?
Renting an apartment for the first time is an exciting endeavor. After all, an apartment affords you a place to stash your things, chill with friends, and catch some z’s at night. However, an apartment is a big financial commitment — one that landlords don’t take lightly, and you shouldn’t either! In order to qualify to rent an apartment, renters need to prove that they can afford the apartment. Beyond affording the apartment, you also should be able to show that you have a reputation for paying all of your bills on time. Proving that you are financially capable of affording and paying for an apartment can often be slightly more difficult for first time renters. But fear not, this is where a guarantor can come in to make the process a little bit easier.
So, just what is a guarantor?
A guarantor is someone who is (typically) more financially sound than you are and is willing to sign onto the lease and legally and financially guarantee the apartment. This means that if something happens to the apartment that you can’t afford to fix, the guarantor is in charge of paying for it. Additionally, if something happens to your income making you unable to pay the rent, the guarantor is tasked with paying it. Asking someone to be a guarantor shows a potential landlord that they are not putting themselves in a risky financial situation by renting to a first-time renter. However, while renting with a guarantor is a great way to convince a landlord to rent you an apartment, it also comes with some drawbacks.
Advantages of signing a lease with a guarantor:
On the positive side, renting with a guarantor can relieve the financial stress of an apartment. This means that no matter what happens, you know that there is someone around (and willing) to help cover things financially should the need arise. Renting with a guarantor is also a great first step to getting your foot in the real estate game. That is, once you’ve rented one apartment with a guarantor and handled the expenses well, you will most likely be rented to in the future with less barriers to entry.
Disadvantages of signing a lease with a guarantor:
However, renting with a guarantor can have a negative side. First and foremost, asking someone to be your guarantor is a big favor, and it is only appropriate if you are very close to the person – usually a trusted family member or friend. This is because their finances are in your hands, and should something happen to the apartment that you can’t afford (which in most cases is unlikely), they will be the ones that have to pay for it. The guarantor / guarantee relationship can be stressful, and it’s often a stress that people don’t want to put on a relationship with someone that is important to them. Furthermore, a guarantor doesn’t benefit from being a guarantor on a lease (it does not improve their credit score and they don’t receive any financial reward), thus it’s a potentially large sacrifice with little reward.
Final tips to remember
Ultimately, if you find the right person to be your guarantor, having someone guarantee a lease can be a great step to renting your first apartment. Find the right person to ask, then explain to them that in order to rent an apartment, you will need someone with a more substantial financial history to sign onto the lease agreement with you. You will also want to explain to the potential guarantor (if you’re in this scenario) that you are able to afford the apartment yourself, and that they shouldn’t worry about any regular costs associated with the rental. Pro tip: it can also be helpful to sign a piece of paper between you and the guarantor stating the financial arrangements should something end up happening to the apartment that will need to be paid for. After all, you can never have too much in writing.