financial guarantees

Financial guarantees are commitments made by one party to cover a financial obligation if another party fails to meet it. Essentially, they serve as a safety net, ensuring that lenders or investors get repaid, even if the borrower defaults. Commonly used in loans or leases, these guarantees can be provided by individuals, companies, or banks. The guarantor takes on the risk, and often needs to pay a fee for this assurance. This mechanism helps facilitate transactions by providing additional security to the party receiving the loan or investment.