If a loan/line of credit says no collateral required does that mean that no personal guarantee is needed either? If not what is the difference? Wouldn't a personal guarantee be like collateral?
2007-06-15 05:08:12 · 7 answers · asked by thelivingparadox 1 in Business & Finance ➔ Other - Business & Finance
Not exactly. Generally, collateral is physical. In other words, the lender can legally 'attach' physical goods if necessary in order to recoup investment on a failed loan. An example is that, under a mortgage agreement, the property involved is the collateral.
Under a personal guarantee, a person signs based upon their personal asset value and reputation, with no specific collateral mentioned. However, in the event of default, it is possible that the lender will sue the guarantor and go after some or all of that person's physical or financial assets.
2007-06-15 05:12:37 · answer #1 · answered by acermill 7 · 0⤊ 0⤋
Collateral Guarantee
2016-12-17 09:50:20 · answer #2 · answered by ? 4 · 0⤊ 0⤋
No Collateral Required stated on a loan offer means just that, not required. You would need to actually apply for the loan to find out what, if anything,the Lender requires. Collateral means you have some item (car, boat, house. etc.) of value you are willing to promise/pledge in case you can't pay back the money you borrow. If you don't repay the loan, they (the lender) take the item of value from you and sell it to someone else to get the money to pay your loan......
Personal guarantee means someone with good credit will pay the loan if you don't. Usually the lender doesn't want to repossess your item of value, they want the money and require the person who guaranteed your credit worthiness to repay the loan.
2007-06-21 16:52:11 · answer #3 · answered by Banker 6 · 1⤊ 0⤋
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Collateral means you are offering something of value to secure the loan. If you default, the lender can take possession of the item. Cars secure an auto loan. Houses secure a mortgage. If you don't pay, the lender will foreclose. A personal guarantee is a formal promise by someone with sufficient means and reputation that they will pay the debt if the original borrower defaults. For example, I could personally guarantee a loan one of my children takes out. If she doesn't pay, I'm responsible.
2016-04-06 23:53:54 · answer #4 · answered by Anonymous · 0⤊ 0⤋
a personal guarantee is like a hand shake and collateral is putting something up against the loan in case it is not paid in full, they can take whatever you put up as collateral
2007-06-15 05:12:48 · answer #5 · answered by patti p 3 · 0⤊ 0⤋
PERSONAL GUARANTEE IS NEGOTIABLE WHERE AS COLLATERAL NOT NEGOTIABLE
2016-08-25 14:10:00 · answer #6 · answered by Shyam 1 · 0⤊ 0⤋
This is an interesting question, and one that intrigued me for quite a while.
2016-08-24 05:47:17 · answer #7 · answered by hyon 4 · 0⤊ 0⤋