A bank’s promise of payment.
Guarantee loans are a special type of loan under which the loan amount is not made available as cash. The underlying principle of a guarantee loan is the promise of the guarantor promises to pay the amount owed in the event of borrower default.
Here are a few examples of guarantee loans:
- rental deposit guarantee,
- advance payment guarantee ,
- performance bond,
- payment guarantee,
- cover and retention guarantees.
Guarantee loans require certain collateral based on the amount of the guarantee loan requested. A guarantee commission and processing fee are charged for issuing a guarantee loan.