What Does It Mean To Be A Loan Guarantor In Singapore?

What Does It Mean To Be A Loan Guarantor In Singapore?

Many people take up easy loans in Singapore every year for personal needs. Some of these loans pose a greater risk of default for moneylenders and thereby require a guarantor. A loan guarantor is someone who promises to take responsibility for someone else’s loan repayment should the latter fail to comply with their loan obligations. To put it differently, if a borrower cannot or does not pay their loans, both they and the loan guarantor are obliged to make good on the outstanding debt.

Getting a loan guarantor is not uncommon in Singapore. To understand more about this, here are the most important pieces of information you should know about being a loan guarantor. 

Requirements to be a loan guarantor in Singapore

There are certain eligibility requirements that are required to be fulfilled prior to becoming a loan guarantor. Generally, under the law, a loan guarantor must possess the following requirements:

  • The individual is a citizen or a permanent resident of Singapore.
  • They are at least 21 years old.
  • They are not undergoing bankruptcy proceedings or an undischarged bankruptcy.
  • In some instances, they must receive enough income and have a good credit history.

Main responsibility of a loan guarantor

The responsibility of a loan guarantor is to make good on the principal debtor’s loan obligations in case the latter defaults in payment. For instance, if your sibling requires a loan to finance their education, and they are still under 21 years old, you may agree to be a guarantor of their loan and co-sign the loan contract in this capacity.

As long as your sibling diligently makes repayments to their loan, you will not be affected in any adverse way. However, if your sibling suddenly fails to repay their debt, either fully or partially, you will be required to bear the loan on their behalf. Your responsibility as a loan guarantor lasts until the loan has been properly discharged. Beyond the loan, you will also be liable for all legal fees and interests incurred over the whole period of default payment.

Reasons why one might need a loan guarantor

1. The age of the applicant is outside the limit 

In Singapore, there is an age limit for getting loans. A person needs to be at the right age to obtain a loan. If a loan applicant has yet to reach the minimum age limit set by the law or the money lender, they will need a guarantor. Similarly, if the loan applicant is old and near retirement age, some money lenders may require them to get a guarantor for their loan.

2. The applicant has no valuable assets 

Most money lenders demand assets as security, especially for huge loans. However, if the loan applicant does not have valuable assets, they may need a loan guarantor willing to pledge their assets as loan security. 

3. The applicant has no adequate income 

Some money lenders tend to look at the loan applicant’s income to determine if they are creditworthy. If the applicant’s income does not reach the minimum income required to be eligible for a loan, a guarantor may help them. This loan guarantor must agree to pledge their income as loan security in case the principal debtor defaults.

4. The applicant’s credit history is negative 

Some money lenders also consider the applicant’s credit history in approving or rejecting their loan application. If an individual has a negative credit history because of poor financial decisions in the past, money lenders might see them as a great risk to lend money to. In that case, a loan guarantor may save them.


There are several different reasons why a guarantor may be required before someone is able to successfully take out a loan. Loan guarantors essentially assure that the loan will be paid even though the principal debtor has gone insolvent or is unable to make repayments. Due to the valuable nature of their responsibility, understanding more about loan guarantors is vital for every borrower.

If you are in need of hassle-free and reliable financial assistance, Orange Credit is here to help you! We are a reputable Geylang money lender that offers a range of quick, flexible, and trusted loans for a number of purposes. Whatever financial needs you may have, our loans can surely help you address them. Do not hesitate to contact us today to learn more about our services.