The guarantor assumes responsibility equally with the borrower: if the obligation is not fulfilled, the creditor has the right to turn to the guarantor for repayment. Unlike a pledge, the security here is not property, but the solvency of a specific person.
Responsibility is usually joint and several — the creditor can demand repayment from the guarantor without first turning to the borrower. The requirement extends not only to the principal debt, but also to interest, penalties and collection costs.
An important consequence that is often underestimated: the obligation is reflected in the guarantor's credit history and is taken into account when assessing their own debt burden. A guarantee can prevent the guarantor from obtaining credit, even if the borrower pays properly.
In corporate borrowings, a parent company guarantee is a common way to secure a bond issue. It should be evaluated based on the financial condition of the guarantor itself: the security is worth exactly as much as the guarantor's ability to pay.