Loan guarantee

src: i.ytimg.com

The loan guarantee , in finance, is a pledge by a party (the guarantor) to bear the borrower's debt obligations if the borrower fails. Warranties may be limited or unlimited, making the guarantor only liable for part or all of the debt.

Video Loan guarantee

Personal loan guarantee

There are two main types:

1. a guaranteed mortgage
2. Unsecured warranty loan

Mortgage collateral

Popular with young borrowers who do not have large deposits stored and need to borrow up to 100% of property value to purchase property. Generally, their parent will provide a guarantee to the creditor to cover any deficiencies in case of default.

There are three main types

1. Mortgage Guarantor - generally, a parent or close family member will guarantee mortgage debt and will cover the obligation of repayment if the borrower fails.
2. Families offset mortgages - typically, parents or grandparents will keep their savings into accounts related to the borrower's mortgage. They are not interested in these savings while offsetting the mortgage but will be able to get back their money completely once the mortgage has been paid up to between 70% and 80% of the market value of the property.
3. Mortgage deposits of the family - family members will place deposits in a special savings account and retained as collateral against the mortgage property. Interest is paid on this deposit, but if the borrower fails to pay then the money will be taken from this savings account.

Unsecured warranty loan

Unsecured personal loans are popular with borrowers who have poor credit ratings. They also need a guarantor to fulfill the borrower's obligations if they fail to pay the loan installment.

Maps Loan guarantee

Government loan guarantee

This term can be used to refer to the government to bear private debt obligations if the borrower fails. Most loan guarantee programs are established to correct market failures felt by small borrowers, regardless of creditworthiness, lack of access to available credit resources for large borrowers.

Loan guarantees can also be extended to large borrowers for political reasons. For example, Chrysler Corporation, one of the "big three" US automobile manufacturers, obtained loan guarantees in 1979 amid its collapse, and lobbied by the interests of the workers. Somewhat different, despite the intensive lobbying by the Israeli lobby, President George HW Bush rejected $ 10 billion in loan guarantees to the Israeli government Yitzhak Shamir because of its pro-settlement policy and because the Palestinians and many Arab governments view the previous receipt of loan guarantees as an indicator of the lack of American credibility as mediator.

Bush requested and accepted Congressional delays in security discussions, and the 1991 Madrid Conference was then held. This loan guarantee was issued later, after Yitzhak Rabin's election and his pledge to end Shamir's settlement policy and formulate a national priority.

Government programs and agencies

Bulgarian

• National Guarantee Fund

Netherlands

• SME credit guarantee scheme (BMKB)

United Kingdom

• Financial Guarantee Company

United States

• Fannie Mae
• Export-Import Bank
• Federal Family Education Loan Program
• Freddie Mac
• National Government Mortgage Association
• Small Business Administration
• USDOE
• VA loan
• USAID Development Credit Authority
• US. Agricultural Department Loan (USD) Department of Agriculture (USDA)

See also

• Surety
• Promissory note
• Riba

References

Source of the article : Wikipedia