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What is the meaning of counter guarantee?

Time: 2014-03-25         Source: Financial 360 original         Author: Chen Li

In the applicationSecured loan, The borrower will sometimes be required to provide anti-guarantee measures, can be successfully obtainedloan. However, "counter-guarantee" is, after all, a highly specialized vocabulary. For a novice to a loan, it is really a shameless monk. But you do not worry,Financial 360 loansThis is the answer for you.

To know what is counter-guarantee, you also need to know what the guarantee is. As the guarantor, in the borrower unable to repay the loan, will be the performance guarantee responsibility, on behalf of the repayment of the remaining interest. The guarantee side for the sake of insurance, to ensure the realization of its recovery, will allow the borrower to provide collateral for counter-guarantee.

Counter-guarantees are often used between guarantee companies and borrowers. Generally speaking, in order to make profits and reduce the risk of loans, banks usually let under-qualified users find the guarantee company and can only approve the loan with the guarantee of the guarantee company. The aim of the bank is to shift the risk to the guarantee company. When the borrower refuses to repay, the guarantee company must pay the bank instead of the borrower.

How to compensate for the loss of the guarantee company? As a guarantee company will certainly not willing to bear these losses, it will require the borrower to provide some collateral to guarantee, guarantee the interests of the security company. If the borrower refuses to repay, the guarantee company has the right to file a lawsuit in the court and request the seizure and sale of the mortgaged property to make up for the economic losses.

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