A guarantee added to a debt obligation by a third party who is not the payee or the holder, but who ensures payment should the issuing party default. The debt obligation could be a note, bond, promissory note, bill of exchange or draft. The third party providing the aval is usually a bank or other lending institution.


Since avals can be forged, caution should be taken when accepting these notes. Banks usually only provide an aval to issuers with very good credit ratings. An aval might be used to guarantee the payment of a buyer to a seller.The process of avalizing is performed mainly in Europe; in the United States, banks have restrictions as to what instruments may be provided an aval.

  1. Avalize

    To avalize is the act of having a third party guarantee the obligations ...
  2. Promissory Note

    A promissory note is a financial instrument that contains a written ...
  3. Note

    A note is a financial security that generally has a longer term ...
  4. Bank Draft

    A bank draft is a type of check where payment is guaranteed by ...
  5. Obligation

    An obligation in finance is the responsibility to meet the terms ...
  6. Loss Payable Clause

    A loss payable clause is an endorsement where an insurer pays ...
Related Articles
  1. Personal Finance

    Banker's Acceptance 101

    A banker's acceptance, or a negotiable time draft a bank guarantees to pay at a predetermined date, is a common way of financing international trade activity.
  2. Investing

    Party City Holdings: How It's Fared Since Its 2015 IPO (PRTY)

    Learn about Party City Holding's performance as a public company. Investors would have lost much more than the Russell 2000 Index by investing after the IPO.
  3. Insights

    How Countries Deal With Debt

    For many emerging economies, issuing sovereign debt is the only way to raise funds, but things can go sour quickly.
  4. Small Business

    Master The Art Of Negotiation

    Learn the strategies that will help you to come out on top in any negotiation.
  5. Investing

    Party City Slides on Surprise Secondary Offering

    Shares of Party City Holdco (NYSE: PRTY) plunged 8% on Friday after the party goods retailer abruptly announced a secondary offering of 10 million shares. The offering will be made on behalf ...
  6. Investing

    What's a Debt Security?

    A debt security is a financial instrument issued by a company (usually a publicly traded corporation) and sold to an investor.
  7. Investing

    Will Corporate Debt Drag Your Stock Down?

    Corporate debt can mean a leg up for firms, or the boot for investors. How to tell the difference.
  8. Insights

    Alternative Ways To Invest In Debt

    These five options can provide investors with lucrative investments - but they're not without risk.
  1. What is the difference between a bill of exchange and a promissory note?

    Learn what bills of exchange and promissory notes are, along with notation of the primary differences between these two documents. Read Answer >>
  2. Where on the Internet can I find free sample templates for a bill of exchange?

    Understand the concept behind a bill of exchange, and learn about websites on the Internet where you can find free sample ... Read Answer >>
  3. Who uses bills of exchange?

    Find out who uses bills of exchange, why they are important in international trade and what happens when a bill is traded ... Read Answer >>
  4. How does a company obtain a bank guarantee?

    Find out how bank guarantees work, why they are issued and the process that a business normally goes through to acquire one ... Read Answer >>
Hot Definitions
  1. Perfect Competition

    Pure or perfect competition is a theoretical market structure in which a number of criteria such as perfect information and ...
  2. Compound Interest

    Compound Interest is interest calculated on the initial principal and also on the accumulated interest of previous periods ...
  3. Income Statement

    A financial statement that measures a company's financial performance over a specific accounting period. Financial performance ...
  4. Leverage Ratio

    A leverage ratio is any one of several financial measurements that look at how much capital comes in the form of debt, or ...
  5. Annuity

    An annuity is a financial product that pays out a fixed stream of payments to an individual, primarily used as an income ...
  6. Restricted Stock Unit - RSU

    A restricted stock unit is a compensation issued by an employer to an employee in the form of company stock.
Trading Center