Guarantee credits are also called Bankaval. Contrary to what the name suggests, no loan amount will be paid out to you. The term guarantee credit is used as a generic term for guarantee and surety bonds issued by banks and other credit institutions. In the case of a bankaval, your credit institution promises to give you a guarantee or surety. In return, the bank will charge you a fee or interest. A guarantee credit is a special form of loan.
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Different variants of guarantee credits
Guarantees are offered and used in various forms. These variants are:
[list] [*]Payment avalanche[*]Warrantyaval
[*]Advance payment avalanche
[*]Mietaval
[/list]
Payment guarantee: In a payment guarantee, your bank guarantees on your behalf to a supplier that the price for a delivery and/or service will be paid in full and on time after delivery has taken place.
Warrantyaval: Your company guarantees your customers a warranty liability for a delivered product. With this guarantee, your bank guarantees that this promise will be kept, even if your company may no longer be able to do so.
Advance payment: A bank grants a guarantee to a customer who has made an advance payment that the advance payment will be refunded in full if the service or delivery is not or not completely rendered.
Mietaval: In this guarantee, the credit institution or a private individual provides a rental guarantee for a customer. This guarantee credit is a cashless alternative to the deposit of a rental deposit in cash or the payment on a so-called rental deposit savings book. With a rental guarantee, your bank guarantees to reimburse unpaid monthly rents up to the maximum amount of the rental deposit and/or damages. For a rental guarantee of 2000 Euro, for example, you have to pay monthly only pay a fee of a few Euros.
Advantages of a guarantee credit
Compared to other forms of financing, a guarantee credit offers you several advantages: You do not have to prove liquidity and can therefore conduct business with less financial resources. Since, from the point of view of the credit institution, it is not a loan but only a contingent liability, the guaranteed interest rate is significantly lower.
Disadvantages of a guarantee credit
Even if you as a guarantor are not paid a loan amount, a bank guarantee has an effect on your creditworthiness. If you as an entrepreneur make continuous use of guarantee credits, you must expect these to have an effect on your credit lines. The Schufa will be notified of rental avals to consumers and can therefore also influence your creditworthiness.
When is a guarantee credit recommended?
If financial resources are scarce, a guarantee credit is recommended as a substitute for equity capital. You save your money and have to pay only small aval fees. As an entrepreneur, you are much more flexible with a guarantee credit: you are able to offer your business partners full guarantees without the need for a credit check. Your bank is conducting this review. Guarantee credits are an expedient solution in particular for warranty and bid bonds, freight and customs guarantees. As a merchant and entrepreneur, you may deduct the full amount of the guarantee fee from the tax as a business expense.
What to bear in mind when applying for a guarantee credit
You must always apply for a company guarantee credit in writing. You must apply to a bank branch with which you have no business relations at the time of application. Applications for consumer bonding and guarantees can also be made online. In the case of a long-term guarantee facility the amount of the current guarantee fee is more important than the set-up costs. If you apply for a short-term guarantee, the amount of the set-up fee is more significant.