Guaranteed Loan

AAA

DEFINITION of 'Guaranteed Loan'

A loan guaranteed by a third party in the event that the borrower defaults. The loan is quite often guaranteed by a government agency which will purchase the debt from the lending financial institution and take on responsibility for the loan.

INVESTOPEDIA EXPLAINS 'Guaranteed Loan'

This type of agreement is often made if the borrower is an unattractive candidate for a loan. It is a way for people in dire need of financial assistance to acquire funds, without putting excessive risk on the lending financial institution.

RELATED TERMS
  1. High Ratio Loan

    A loan of any type for which a relatively small down payment ...
  2. Loan

    The act of giving money, property or other material goods to ...
  3. Default Probability

    The degree of likelihood that the borrower of a loan or debt ...
  4. Financial Institution - FI

    An establishment that focuses on dealing with financial transactions, ...
  5. Debt

    An amount of money borrowed by one party from another. Many corporations/individuals ...
  6. Default

    1. The failure to promptly pay interest or principal when due. ...
Related Articles
  1. What Is A Corporate Credit Rating?
    Investing Basics

    What Is A Corporate Credit Rating?

  2. Debt Consolidation Made Easy
    Budgeting

    Debt Consolidation Made Easy

  3. Check Your Credit Report
    Credit & Loans

    Check Your Credit Report

  4. Promissory Notes: Not Your Average IOU
    Personal Finance

    Promissory Notes: Not Your Average IOU

comments powered by Disqus
Hot Definitions
  1. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  2. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  3. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  4. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  5. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  6. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
Trading Center