Financial Safety Advice

Financial guarantees are a new type of security over financial instruments or cash account designed to ensure compliance with financial obligations. They are not a mere mechanism with security functions. They serve to ensure the financial lending institutions safe and efficient coverage, subject to agreement of wills simple. But it also has benefits for borrowers, because they facilitate access to credit on better terms. Hence the trend toward widespread use beyond the initial estimates of limiting its application to relations between banks.

In Spain are regulated in the second chapter of Royal Decree Law 5 / 2005, on urgent reforms to boost productivity and to improve public procurement, in addition to transpose Directive 2002/47/EC, has tried to sort and systematize the scattered banking and financial guarantees.

Financial guarantees are real security interests that arise in nature by the inadequacy of traditional safeguards typified in the Civil Code to meet the needs of financial market coverage. They are special guarantees real nature that allow Read the rest of this entry →

Everyone knows that there are many types of financial products. In today’s market is a great diversity of conditions that make that we have an incredible range of possibilities when investing. In contrast to this, there are only three possible guarantees or tricks up its sleeve Frequently, guarantees are saved to grant the rights or money in a financial transaction.

Financial guarantees are considered to ensure compliance with the obligations entered into, and vary depending on what the asset or the exact conditions to be signed between the lender and the borrower.

It is very common for us to know his name but not really know what they are, so let’s try to explain each of the three financial guarantees:

* Endorsement: the figure of the guarantor may be a natural or legal person, raises the most common of all. If a situation of default by the first payer, and therefore does not take over the debt, the guarantor will have to take care of it, and so on with all guarantors who signed the original warranty (can be a or more).

* Mortgage: the financial institution with which we signed our financial asset may be made with personal property as collateral in case of occurrence of a default. Normally we talk about real estate, although sometimes it may be a case of movable or be seized under judicial examination.

* Or surety bond: it is the least used, but it is a security deposit so that prior to the signing of the contract, making a figure similar to that of a voluntary endorsement. Its use is widespread as a sign of confidence for the rental of various types of assets, as is insurance under which the tenant from the first time.

If we value these financial guarantees in modern times must take into account that have a positive side and negative for any financial agent needs to act in an operation and will require a guarantee. Although financial guarantees to cover the needs arising from staff towards safety on the market, why not always good for us all.

Financial guarantees have a positive side because it can protect against some types of financial stocks at some risk, but also a negative side, because if we fail to achieve an economic level sufficient to acquire certain warranties or guarantees required, we may see injured as financial agents in getting a claim that we need.

Normally, we can achieve an improvement in the conditions if we made a deal closed with respect to security with our borrower. In most cases, even when there is an improvement of those conditions will not be able to reach a minimum level of funding required to achieve prior to address the payment of these guarantees.

The securities, therefore, are necessary insurance, located within the free market, but sometimes they can hurt us directly to get some active and we do not have the necessary conditions to sign a financial guarantee.