A surety is a person or entity that assumes direct liability for another’s obligation. Financial creditors may require the debtor to find a surety, who then signs the loan agreement along with the debtor. A financial surety’s liability arises as soon as the agreement is closed. Sureties are commonly used in legal, financial, and contractual contexts, such as in surety bonds, to ensure compliance with agreements and obligations. Although similar to a guarantor, a financial surety's liability arises as soon as the agreement is closed.
[Last updated in June of 2024 by the Wex Definitions Team]