What is group guarantee?

In case a lending company cannot fulfill its obligations under a buyback obligation, there might be an additional safety mechanism that could protect your investment.

Many lending companies are part of larger groups operating multiple entities. Sometimes these groups offer group guarantees. In short, this means that the group of entities will be legally obliged to cover the obligations of a failing lending company that has run into trouble and cannot repay its investors.

Because groups of entities fail less frequently than individual lending companies, group entity serves as a strong complement to the standard buyback obligation.