Lenders provide loans with the paramount aim of being paid back. Towards this end, lenders sometimes require borrowers to provide guarantors as additional security for repayment. The issuance of a guarantee usually provides comfort to the lender that in the event of default, it can either go after the principal borrower or the guarantor.
A guarantee refers to a pledge by a person (guarantor), other than a party upon whom the contractual or other legal obligation is imposed, to the effect that if the party so bound (principal) fails to perform the act in question, the guarantor will either perform or make good any loss or claim arising from the principal's non-performance.
