Guarantees are mechanisms that support compliance with the payment of credits that a financial entity disburses. They are normally required by financial intermediaries to cover the probability of default by their debtors and normally have an impact on their accounting scheme.
Now, in a more digital world that demands for companies that disburse credit obligations greater agility to constitute guarantees and achieve that differentiating factor in the market.
The most common types of guarantees are:
- Mortgage: It is an instrument used to create a guarantee on real estate. It must always be constituted on a public deed and gives the lender the right to auction off the property in the event that the debtor does not pay the obligation.
- Endorsement: The Guarantee is a guarantee in which a person is obliged to pay for an obligation under the same conditions acquired by the person who requested the credit, in case the debtor cannot fulfill it.
- Guarantor: A guarantor is very similar to a guarantee, the difference is that in this case, the bond only commits in the second instance, that is, it only responds until everything possible has been done to collect from the main debtor. In the market there are institutional guarantors (companies) that support credit obligations so that debtors do not have to request guarantors.
- Pledge guarantee: It is an accessory contract in which, through a movable asset, the fulfillment of an obligation is guaranteed. If the debtor does not pay the obligation, the financial intermediary keeps the movable property.
- Standby Letters of Credit: They are instruments through which it seeks to support credit operations where a bank constitutes an irrevocable commitment to support the obligation of a third party in favor of a beneficiary.
- Future rights: it is the right to receive a payment of future benefits from the debtor. It is mainly used to cover commercial credit operations in which acquisitions of machinery and equipment are financed and guaranteed with the income to be received.
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