There are at least six different times when Proverbs warns us against being either an guarantor or against surety. Here we are warned against being a guarantor for a stranger. The warning we are given by Solomon (and by the Lord) is that we will surely suffer harm for such an action.
When you guarantee another's debt - you are responsible for their action or their inaction. If they pay their debt on time, you will have no problem. If they do not - then you have to pay their debt. The reality though is that a person who has to ask for a guarantor is usually someone that a bank or a business considers a higher risk. We should learn from their concern that we too, should be concerned as well. This is why so many who become a guarantor regret it dearly. The high risk the bank is unwilling to take - becomes the risk of the guarantor. It is no shock to learn then that more often than not - the guarantor pays the money in the end.
But what do you say to someone who comes to you asking for surety - or for you to be their guarantor. First, you graciously decline citing your desire to be their friend longer than the terms on the loan you are being asked to sign. When you become a guarantor your relationship with that person changes. It changes either for the length of the loan or, in the case of thsoe who default on the loan, possibly forever. Your friend may not like hearing this at first - but they will appreciate that you view a friendship as more important than a loan. Second, you graciously decline citing Scripture. You explain that your refusal to become a guarantor is being done because you want to obey God. In this case their frustration will be with God more than you. Third, you can encourage them lovingly that desiring something they cannot afford is eventually going to be harmful to them. Those who take this path consistently pay a much higher price in the years to come. It is better to control our desires, and keep them within the means that God has given to us. We may not get whatever we want when we want it - but - honestly, has that ever worked out well for anyone?
The Scriptures counsel us to be those who "hate" being a guarantor. The reason God tells us this is not to make us stingey. He says it for our protection, for the protection of the friend or family member who asks, and for the protection of relationships we want to keep far into the future - so we can be of long-term encouragement and blessing to those we love.