Not only money but also creditworthiness can be lent in the financial and economic sector. In contrast to money lending, lending does not provide money in the form of a loan or loan from a bank, but the creditworthiness of a credit institution itself. For example, a bank or savings bank provides its customer with a third party, such as a dealer, Suppliers or federal government, available as security. Only when the bank customer is unable to meet his obligations will the bank be asked to pay due to the loan. In the case of a loan, a customer’s bank issues a guarantee or guarantee to a third party. There are four types of loan lending. These are the guarantee credit, the letter of credit, the acceptance credit and the rembours loan.
Loan: guarantee credit
The guarantee credit denotes a guarantee or guarantee or other guarantees that a credit institution enters into as a contingent obligation for its bank customers. The term Aval comes from the Italian term Avallo, which means change in the German translation. The guarantee loan is a form of loan. According to Section 1 No. 8 of the German Banking Act (KWG), the guarantee credit is a banking transaction, according to which it is only the responsibility of banks to grant a guarantee credit. A surety loan is also synonymous with a bank guarantee. In exceptional cases, insurance companies may also approve this form of loan.
The guarantee credit establishes a legal relationship between the guarantee lender as the guarantor or guarantor, the guarantee borrower as the debtor and a third party as the creditor and beneficiary of the guarantee credit. The bank is liable as a contingent obligation in the event that the guarantee borrower is unable to perform the service owed to the creditor. However, the bank assumes that the guarantee borrower fulfills its contractual obligation. If the eventuality arises that the debtor or surety borrower cannot pay, the bank must pay the creditor the amount owed. In this situation, the contingent liability becomes a real liability.
Pursuant to Section 774 of the German Civil Code, the claim from the creditor against the debtor is transferred to the guarantee lender as part of the legal assignment. As the guarantee lender, the credit institution is responsible for assessing the liability risk, as is the enforcement of the repayment of the amount of money made by the guarantee borrower. The guarantee credit can consist of a guarantee or a guarantee. The guarantee obligation is ancillary. It is therefore dependent on the existence and extent of the main debt. The guarantee granted by the guarantee lender is regulated by law in sections 765 to 778 of the German Civil Code (BGB) and in paragraphs 349 to 351 of the German Commercial Code (HGB). The guarantee is not accessory and represents an independent obligation independent of the main debt. The guarantee itself is not regulated by law. The guarantee is based on a contractual contract under Section 311 of the German Civil Code, the content of which can be largely defined by the guarantee credit contracting parties themselves in the course of the freedom of contract.
The form of a guarantee loan is based on the respective purpose and scope of action. Bank guarantees can be geared towards short-term, medium-term and long-term terms. In the context of international business, unlimited credit lines are also common. There are different types of guarantee loans. These include, for example, down payment advice, bidding advice, guarantee advice, performance advice, rental advice, process advice, bill of exchange advice and customs guarantees. As a contingent obligation, a guarantee loan expires after implementation of the purpose and return of the issued certificate to the liable bank.
Loan: Letter of credit
The letter of credit is a loan in the form of a joint, abstract and conditional promise of payment from the bank of an importer to an exporter. With a letter of credit-compliant document, the bank undertakes to make payment to the respective exporter of goods upon presentation. This form of loan is used in foreign trade. In terms of its characteristics, abstract for the letter of credit means that the credit institution’s promise to pay is legally independent of the basic transaction and occurs independently of the purchase contract. Being a conditional promise to pay means that the promise to pay is tied to conditions that are always documentary.
The purpose of the letter of credit is to serve the interests of buyers and sellers in foreign trade. In this sense, the buyer receives the certainty that he only has to make payment after the goods have arrived and it is documented by the presentation of proper documents. The advantage of the seller is the certainty that he receives his money for the delivery of his goods by presenting the corresponding documents. Letter of credit credits are considered contingent liabilities until the documents are handed over to the importer. The transaction must be based on a purchase contract that contains the terms of payment documentary letter of credit. The letter of credit (importer) places the order with his bank to provide a letter of credit for the respective exporter as beneficiary.
The prerequisite for this is that the importer has sufficient credit or credit lines with his bank. The credit institution then opens the letter of credit in favor of the exporter. The credit institution calls in an advising bank in the country of the exporter for processing. This can be a correspondent bank of the bank or a bank specified by the importer. In the letter of credit, the goods must be defined in terms of type, quantity and packaging, as well as the shipping deadlines, the locations for loading and unloading and the document template. The documents must be specified for the payment of the letter of credit. The credit institution opening the letter of credit undertakes irrevocably to make payment to the exporter, provided that the documentary conditions have been fully met.
Loan: Acceptance loan
The loan in the form of an acceptance loan is characterized by the commitment of a bank to a customer by means of a bill of exchange. The bank accepts a change from their bank customer. The beneficiary must be a creditor of the bank customer. In this form of loan, the credit institution is liable for redeeming a bill of exchange. If the bill of exchange or acceptance credit serves as a means of payment, it can be handed over to a supplier as a means of exchange for the delivered goods. As a loan, it is evidence of the procurement of liquid funds. An accepting credit institution often reserves the right to discount the bill of exchange. The acceptance loan is usually cheaper than other loans. An acceptance credit is only ever made available to companies with a high credit rating. The acceptance credit in foreign trade in the form of a return loan is of great importance. Foreign business partners can often find it difficult to assess the creditworthiness of a domestic entrepreneur. Accepting a bank increases a company’s business reliability and trustworthiness vis-à-vis its foreign partners.
Loan: Rembours loan
The rembours loan is in the form of a bill of exchange, a loan and is mainly used in foreign trade transactions overseas. A reimbursement bank accepts a draft (bill of exchange) from an exporter. In return, he receives the security from the respective bank that the goods will be paid for. The bank acceptance is given with the delivery of previously defined documents. The basis is, for example, documents such as bills of lading, insurance certificates, invoices and examination certificates. The Rembours loan is a loan in that the Rembours bank does not normally have to spend its own funds, since the acceptor must ensure that the loan is covered in good time. The Remboursbank undertakes to redeem the draft on the expiry date. The acceptor undertakes to the bank based on the acceptance contract.