Guarantor vs Cosigner: Understanding the Differences in Lease Agreements

Guarantor vs Cosigner: Understanding the Differences in Lease Agreements

When you’re ready to step into the rental market for the first time, understanding your landlord's expectations and navigating the application process can be daunting. Even with a stable income and good credit score, you may find securing your dream rental apartment a challenge. This is why some individuals consider a guarantor or a cosigner for apartment leases, particularly when they're renting for the first time. But do you know the difference between a guarantor and a cosigner? Don't worry if you don't - this article will cover all aspects of cosigners and guarantors, helping you make an informed decision during your application process.

What’s a Lease Guarantor? 

A lease guarantor is a person who cosigns a rental lease alongside the intended tenant. They agree to pay rent if the tenant fails to do so at any point during the lease’s term. Because lease guarantors take on a lot of financial responsibility for the prospective tenant, guarantors are often parents, friends, or family members, particularly if the prospective tenant was formerly one of their dependents.

Note that guarantors and cosigners are sometimes referred to interchangeably because they both have broadly the same responsibilities for tenants. 

Like guarantors, cosigners must also pay rent if a property’s tenants fail to do so. In essence, lease guarantors provide landlords with a bit of financial peace of mind.

What’s a Cosigner? 

A cosigner is a person who signs a rental lease with you. In other words, the lease's liability gets split in two. It's between the cosigner and you. 

Cosigners don’t have to live with you, but they are financially responsible for the cost of the rent. 

Many cosigners actually contribute to the monthly rent by paying a part of it. Not to point any fingers, but this is pretty common between students and their parents. 

Cosigner vs. guarantor

While the terms may appear interchangeable in a rental lease, there are important distinctions between a guarantor and a cosigner.

Lease guarantors are legally required to pay rent if it is unpaid by the tenant they are bound to. However, lease guarantors do not share the lease with the tenant they financially protect.

Instead, cosigners have the same financial responsibilities as lease guarantors. But cosigners are usually added to the lease as another potential tenant. They have the right to occupy the property, especially if the tenant leaves the property without paying their rent.

In essence, cosigners have more flexibility in terms of living situations. For instance, a cosigner on a lease can live in the unit and contribute their share to the rental cost while also taking on the responsibility for covering the rest of the rent if the other tenant defaults.

To summarize: cosigners might be immediately responsible for rent if they live on the property with their co-tenant, while lease guarantors do not live on the same property and are only responsible for paying rent if the tenant defaults.

Who can be your cosigner? 

First of all, whoever you choose to ask should have good credit and a high enough income. The whole point of a cosigner is to boost your rental application. 

The entire idea becomes redundant if you pick someone that can't afford the rent and has poor credit. 

You should also opt for someone you’re close to. A family member or close friend are both good options. A lot of confidence goes into cosigning. So, you have to pick someone trustworthy but equally trusts you.

Who can be your guarantor? 

Theoretically, anyone can act as a guarantor. But, most renters get someone close to them to take on this financial responsibility, such as family members and close friends.

On the other hand, some companies will volunteer to act as a guarantor on a lease agreement for fees. First-time renters should choose their guarantor carefully and remember the tremendous financial responsibility of the guarantor.

Pros and cons of getting a guarantor

Both guarantors and cosigners have their advantages and disadvantages. They can boost your rental application, prevent eviction, and potentially cover damages. However, they can also be expensive, equally liable for rent, and potentially risk their credit scores.

Pro: Guarantors can cover damages

Landlords always can approach the third party for damages or back rent if the tenant doesn’t pay on time. 

Lots of guarantor leases even allow landlords to go straight to the guarantor instead of the tenant if they don’t receive a rent check promptly

Pro: Guarantors could prevent evictions

The presence of a guarantor on a lease is very useful for preventing eviction if a tenant is delinquent for one or more reasons

Pro: Adding a guarantor to your lease will help your renting chances

In some cases, adding a guarantor to a lease is easier than providing a higher than average security deposit. A guarantor can also make young tenants without a rental history easier to approve for landlords

Con: Guarantors are expense

Usually going to a guarantor will cost a month of rent, or more. Be prepared to pay your guarantor for services incurred.

Con: Guarantors are just as liable for the rent

Having a guarantor on the lease means that, if the guarantor also refuses to pay rent, the landlord must take two individuals to court. A guarantor will also be taken to court if the rent remains unpaid. 

Con: Some guarantors don't cover outstanding payments

Not all guarantors are willing to pay rent for damages that their cosigner may incur, which can again make the eviction or payment recovery process more challenging

Pros and cons of getting a cosigner

People of all walks of life can benefit from getting a cosigner. Although getting one comes with many pros, there are also some cons you should be aware of. They won’t so much affect you (the tenant), but your cosigner. 

Let’s go over the pros and cons of cosigning for an apartment. 

Pro: Great for those with poor or no credit 

Cosigners are going to be your best friend if you have a low or no credit score. The landlord reviews your cosigner’s credit score instead of just yours. 

Their score balances out your low credit- a huge bonus when renting! It'll increase your chances of getting approved for an apartment! 

Pro: Helpful for young people or first-time renters

Many landlords get apprehensive when renting to young or first-time renters. They don’t have any proof to show if they’re a responsible or reliable tenant. 

As such, a cosigner acts like that extra vote of confidence. Cosigning is already a big commitment, so it shows the landlord that your cosigner trusts you. 

Secondly, the landlord has a Plan B in case they run into issues with you during your tenancy. It’s pretty much a fail-proof plan to them!

Pro: A good option for people with poor rental history 

It can be harder to find an apartment for those who have an eviction, broken lease, or default on their file. You can increase your chances of securing a rental apartment if you get a cosigner to back you up. 

Pro: Great for those who have a lower or no income

Landlords typically pay close attention to your income. They want to ensure that you’re making enough to pay rent at the beginning of every month. 

It can be very helpful to cosign with someone if you have a lower/no income. Your cosigner's salary supplements what you have to present to the table. It's almost like applying with two incomes! 

Con: Can lower the cosigner’s credit 

If you miss or default on a rent payment, this could negatively impact your cosigner's credit. It doesn’t matter whether they’re living in the apartment or not. 

A missed payment can land on the cosigner's file if the landlord decides to report it to the credit bureau. Since the cosigner is also financially responsible for the rent, their credit gets hit. 

Con: It can ruin relationships 

Cosigning is a huge commitment. They’re legally bound to your lease. So, if you run into issues throughout your tenancy (aka you don’t pay rent), your cosigner has to pick up the pieces. These financial burdens could seriously damage or even ruin your relationship with them. 

Con: They can be hard to find

As we’ve stated one too many times by now, cosigning is a big responsibility. As such, few people might be willing to cosign a lease with you. This makes things a little complicated if you’re really in need of one.

Con: Cosigners can be costly 

If you can’t find a cosigner, you can always source someone to help you. Cosigning services are the perfect solution for those who don’t have anyone they can use. 

Yet, these services cost a pretty penny. They'll run up those charges associated with applying for a rental. 


There ya have it! These are the basics surrounding cosigners vs. guarantors. 

If you're in the market for a new rental home, Lighthouse also gives cash back on newly signed leases. Find a home on your own or with the help of our team of experts, called Lightkeepers!

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