What does counter-guarantee mean?

Counter-guarantee is often used between the guarantee company and the borrower. Generally speaking, in order to make a profit and reduce the loan risk, banks usually let users with insufficient personal qualifications find a guarantee company, and only under the guarantee of the guarantee company can they grant loans.

The purpose of the bank's doing this is nothing more than transferring the risk to the guarantee company. When the borrower refuses to repay, the guarantee company must replace the borrower and return the money to the bank.

Extended data:

Counter-guarantee, also known as creditor's rights guarantee, repayment agreement or counter-guarantee, refers to the guarantee set by a guarantor other than the debtor to ensure the realization of the right of recourse against the debtor after assuming the guarantee responsibility in the future.

The purpose of counter-guarantee is to ensure the realization of the third party's right of recourse. Article 4 of China's Guarantee Law stipulates: "When a third party provides a guarantee for the debtor to the creditor, it may require the debtor to provide a counter-guarantee. The provisions of this Law shall apply to counter-guarantee. "

References:

Counterguarantee-Baidu Encyclopedia