Letters of Guarantee

The letter of guarantee product, which is a type of non-cash loan, makes it safe to perform a service that will be provided by the enterprises. These are the guarantee contracts given to the creditor by the financial institution to ensure the performance of a task undertaken by the debtor against the creditor. This is the expression of the reputation of the financial institution on the basis of guarantee contracts.

Letters of guarantee are in the nature of non-cash loans. Compared to cash loans, it is a type of loan in which the customer does not pay his account and assumes responsibility only if the risk occurs.

In the letter of guarantee application; There are three parties: Financial Institution (Guarantor), Beneficiary (Borrower) and Addressee (Guaranted).

Financial Institution (Guarantor); Letters of guarantee are issued by banks and authorized insurance companies. The guarantor draws up the letter in accordance with the law, as a rule, on the basis of the non-cash loan relationship between the beneficiary and upon the request of the beneficiary, it issues a letter of guarantee addressed to the addressee. With this letter, the bank guarantees to the addressee that the beneficiary will fulfill the deed committed in the letter of guarantee, otherwise the bank will pay the money specified in the letter to itself (the addressee).

Beneficiary; (Borrower) It is the real or legal person who gives the letter of guarantee to the addressee and takes responsibility for the performance of the work against the creditor and appears as the debtor.

Addressee; (Guaranted) The real or legal person who is given or requested the guarantee. Here is the reason why he asked the Beneficiary for the letter; It is a request for the guarantee of this damage if the addressee suffers a loss due to the beneficiary's action.

With this letter, the financial institution undertakes to pay the amount written in the letter of guarantee to the creditor at the first written request of the creditor, who is the addressee of the letter, without the need for any objection or judgment, if the debtor does not perform the work that he has undertaken to do within the framework of this contract, by attaching it to the contract.