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. Default Probability

    The degree of likelihood that the borrower of a loan or debt ...
  3. Debt

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

    1. The failure to promptly pay interest or principal when due. ...
  5. Financial Institution - FI

    An establishment that focuses on dealing with financial transactions, ...
  6. Loan

    The act of giving money, property or other material goods to ...
RELATED FAQS
  1. How is my credit score calculated?

    The credit score, commonly referred to as a FICO score, is a proprietary tool created by the Fair Isaac Corporation. This ... Read Full Answer >>
  2. What is the difference between moral hazard and adverse selection?

    Adverse selection occurs when there's a lack of symmetric information prior to a deal between a buyer and a seller, whereas ... Read Full Answer >>
  3. What is the difference between an operating expense and a capital expense?

    An operating expense (OPEX) is an expense required for the day-to-day functioning of a business. In contrast, a capital expense ... Read Full Answer >>
  4. What is the difference between compounding interest and simple interest?

    Interest is the cost of borrowing money, where the borrower pays a fee to the owner for using the owner's money. The interest ... Read Full Answer >>
  5. What does the lapse ratio in the insurance sector measure?

    The lapse ratio measures the amount of insurance policy renewals with respect to the total number of insurance policies at ... Read Full Answer >>
  6. Why some insurance policies are more expensive than others?

    There are several reasons that an insurance policy can cost more or less at different agencies. Some of the more common reasons ... Read Full Answer >>
Related Articles
  1. Investing Basics

    What Is A Corporate Credit Rating?

    Is the bond you're buying investment grade, or just junk? Find out how to check the score.
  2. Budgeting

    Debt Consolidation Made Easy

    These five steps can help get you out of debt faster and easier than you'd ever imagined.
  3. Credit & Loans

    Check Your Credit Report

    Make sure there are no errors holding you back from obtaining a loan.
  4. Personal Finance

    Promissory Notes: Not Your Average IOU

    These may be a handy way to borrow money, but this convenience does not come without risk.
  5. Credit & Loans

    Digging Out Of Personal Debt

    Find out why good intentions can put consumers in an even bigger hole than before.
  6. Retirement

    Getting A Loan Without Your Parents

    Use the 5 "W"s to finance your dreams without banking on a second signature.
  7. Professionals

    How to Fund Retirement with Insurance

    So you've contributed the max to all available retirement vehicles...now what? Consider a permanent life insurance policy (and its fee structure).
  8. Retirement

    IUL Insurance: An Alternative Retirement Plan?

    Indexed universal life insurance is the rise. But critics argue that wisely allocated IRA and 401(k) funds will normally offer better returns.
  9. Credit & Loans

    What It Costs To Study Abroad In London

    Studying in London puts you right at the center of a cultural, academic and business hub. And careful budgeting will get you there. Here's how.
  10. Budgeting

    Studying In The United States: New York City

    Advice for international students on how to budget if you want to go to college in New York City.

You May Also Like

Hot Definitions
  1. Fisher Effect

    An economic theory proposed by economist Irving Fisher that describes the relationship between inflation and both real and ...
  2. Fiduciary

    1. A person legally appointed and authorized to hold assets in trust for another person. The fiduciary manages the assets ...
  3. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  4. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  5. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
  6. Brand Equity

    The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent. ...
Trading Center