A third party who promises to provide payment on a bond, loan, or other liability in the event of default. While many guarantees apply to debt instruments, they may also be used for day-to-day expenses. For example, a parent may be a guarantor for an adult child and promise to pay rent to a rental agency if the adult child does not do it. Banks often serve as guarantors on behalf of certain clients, but, just as often, private parties serve as guarantors and promise payment on private loans. Guarantors reduce the risk to loans and liabilities, and usually improve the credit agency ratings of bonds.