An arrangement in which a third party promises to be primarily liable with the borrower for the payment of the borrower's debt is referred to as .

The correct answer is: Surety.

Explanation:

Surety is a contract signed between three parties: the borrower, the lender, and the surety. These contracts are typically signed when the borrower does not fulfill certain credit requirements, thus, the borrower requires a surety as the grantor of the debt instrument. In such cases, the lender reduces the risk of a non-paid debt and tends to lower the interest rate in favor of the borrower.

answer; institution based;