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What does counter-guarantee mean?

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

In the applicationSecured loanAt times, borrowers are sometimes required to provide counter-guarantee measures in order to successfully obtainloan. However, "anti-guaranteeing" is, after all, a very professional vocabulary. For rookie novices, it is really a bit of a monk's monk. But don't worry,Financial 360 LoanExperts will answer this question for you.

To know what a counter-guarantee is, you need to start with what the guarantee is. As the guarantor, when the borrower is unable to repay the loan, it will perform the obligation of guarantee and pay the remaining principal and interest on its behalf. However, for the sake of insurance, the guarantor only guarantees the realization of its right to recourse, so that the borrower can provide collateral for counter-guarantee.

Counter-guarantees are often applied between the guarantee company and the borrower. In general, in order to make profits and reduce the risk of loans, banks usually allow users with insufficient personal qualifications to find a guarantee company and only under the guarantee of the guarantee company can they approve the loan. The purpose of this bank is nothing more than to pass the risk to the guarantee company. When the borrower refuses to repay the loan, the guarantee company must replace the borrower and return the money to the bank.

How can the loss of the guarantee company be compensated? As a guarantee company will certainly not be willing to bear these losses, so it will require the borrower to provide certain collateral as a guarantee to ensure the interests of the security company. If the borrower refuses to repay the loan, the security company will have the right to file a lawsuit with the court to require the seizure and sale of the mortgaged property to make up for the economic loss.

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