What is Surety Loans?
Surety is a third party who promises to pay the money back even if the business or individual goes into bankruptcy – it is a guarantee.
The common terminology used by the financial sector is to say that someone “stands surety” for the loan.
Surety Loans In South Africa?
What is a surety for a loan?
A surety is an organization or person that assumes the responsibility of paying the debt in case the debtor policy defaults or is unable to make the payments.
The party that guarantees the debt is referred to as the surety, or as the guarantor.
Who can loan surety?
A surety bond is a legal binding agreement signed between three parties—the lender, the trustee, and the guarantor.
The obligee, generally a government agency, allows the principal to receive a security bond as a protection against future work output, normally a business owner or contractor.
Is surety required for home loan?
The guarantor is required to meet norms specified by the bank. It is difficult to re-possess the property of a borrower in case of default.
In order to safeguard its interests and to ensure the repayment of the loan is made in time, banks insist on a guarantor. Although the liability is secondary, it is always there.