The difference between a co borrower and a guarantor

Mondo Social Updated on 2024-02-22

There is a difference between a co-borrower and a guarantor in terms of the nature of their liability, their legal status and their right to recovery. The specific analysis is as follows:

1.Nature of Liability:The co-borrower is jointly and severally liable to the creditor, which means that the creditor can claim all of the claims against any one of the co-borrowers. The liability of the guarantor is determined according to the agreement of the guarantee contract, which may be general guarantee liability or joint and several guarantee liability.

2.Legal Status:Co-borrowers are usually in the same legal position as the main debtor, and they share the responsibility for repayment. In contrast, the guarantor is a third party whose liability is triggered when the principal debtor fails to meet its obligations.

3.Right of recourse:After the debt has been repaid, the co-borrowers can recover or share the debt according to an internal agreement. For the guarantor, they have the right of recourse against the debtor after fulfilling the guarantee obligation.

In general, the main difference between a co-borrower and a guarantor is in aspects such as the nature of the liability. The co-borrower directly participates in the debt and is jointly and severally liable to the creditor, while the guarantor bears the guarantee liability according to the provisions of the guarantee contract when the debtor fails to perform the debt. In practice, the roles and responsibilities of both should be clearly defined in the contract to avoid subsequent legal disputes.

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