Guarantee / Guarantor / Surety

With the guaranty, the guarantor undertakes to pay the debt instead of the original debtor if he does not pay or is unable to pay.

The guarantee is typically one of the risk management tools of banks, which is used against non-payment. We don't need to take it to heart if the bank suggests that we include a guarantor in the contract, we may end up with this solution creditworthy or the amount charged after the loan is reduced interest extent. 

There are basically two types of guarantee, simple or simple cash payer. With simple guarantee, the creditor can only involve the guarantor in the fulfillment of the liabilities if he himself has already done everything to collect the debt from the debtor, but was unsuccessful. 

In the case of a surety, the creditor can at any time ask the surety to step in and pay in place of the original debtor. In such cases, the payment can even be divided between the original debtor and the guarantor, and the creditor can decide on the proportions of the division. Banks always expect a surety when they see the involvement of a guarantor as necessary. 

It is important to know if we guarantee someone a to his credit and he does not pay, then – after we have paid – the original receivable is transferred to us. The debtor will therefore already owe us, i.e. we ourselves can try to collect the receivable from the original debtor. Of course, the same is also true in reverse in cases where someone pays our debt on our behalf as a guarantor.