What is a bank guarantee with definition
“A bank guarantee is a guarantee that the bank provides in favor of the applicant, responding to third parties in a payment obligation“. What is a bank guarantee with definition
In other words, the bank becomes a guarantor and will answer for the applicant for the guarantee in the event that he or she cannot make the payment that has been agreed with a third party. What is a bank guarantee with definition
What are the requirements :
By offering a guarantee, the bank is responsible for a possible future debt of the applicant, so it runs a risk, as in loans. The bank does not have to disburse the money at the moment (and it is very likely that it will never do so) but it will also request a series of requirements that, normally, are the same as those required in any asset transaction.
Bank guarantees, in particular, are used mainly as collateral in rental contracts. The applicant for the guarantee must be a client of the bank in question, which will analyze its level of solvency and its compliance with payments and will verify the funds it has available. If everything is in order, there is a good chance that he will guarantee the amount requested. For this, the person requesting the guarantee must provide the specific data of the property that he wants to rent, the owner and the amount requested in the guarantee.
Duration and term What is a bank guarantee with definition
The bank guarantee can have an indefinite term, that is, without expiration or, on the contrary, a specific end date. The amount of the guarantee will be established, in the case of a home rental, by the number of monthly payments requested by the landlord. Once the operation is approved, the bank will grant the bank guarantee document to the applicant who, in turn, will give a copy to his landlord. The granting of the guarantee implies for the client the payment of a series of commissions, such as study, formalization and monthly.
In the established period of time, and provided that the applicant does not comply with what was agreed in his rental contract, the landlord may request the bank for the unpaid monthly payments. To do this, you must also demonstrate the non-payment of said monthly payments. Once the monthly payments have been paid, the Bank may claim them from the applicant.
If the term of the guarantee expires without any incident, the bank itself will close the guarantee and consider the operation completed. The guaranteed client must recover the physical guarantee in order to properly cancel it.