Guaranteed loan means that when the borrower cannot provide a full mortgage (pledge), a third party recognized by the lender should provide a joint and several liability guarantee. The guarantor is a legal person and must have the ability to repay all principal and interest of the loan on his behalf, and must have a deposit account in a bank. If the guarantor is a natural person, he must have fixed financial resources, sufficient repayment capacity, and a certain amount of deposit in the lending bank; the guarantor and the creditor shall enter into a guarantee contract in writing. If the guarantor changes, the guarantee change procedures must be completed in accordance with regulations. Without the approval of the lender, the original guarantee contract cannot be revoked.

Divided according to different guarantee methods: guarantee, mortgage, pledge

1. Guaranteed loan: refers to the provisions of the "Guarantee Law" (abolished as of January 1, 2021) The guarantee method is a loan issued by a third party promising to assume joint and several liability according to the agreement when the borrower cannot repay the loan.

2. Mortgage loan: refers to a loan issued with the property of the borrower or a third party as collateral according to the mortgage method stipulated in the "Security Law" (abolished as of January 1, 2021) .

3. Pledge loan: refers to a loan issued with the movable property or rights of the borrower or a third party as pledge according to the pledge method stipulated in the "Security Law" (abolished as of January 1, 2021) of loans.

Legal Basis

Article 399 of the "People's Republic of China and Civil Code" prohibits mortgage scope of property. The following properties shall not be mortgaged: (1) Land ownership; ( 2) The use rights of collectively-owned land such as homesteads, private land, private hills, etc., except those that can be mortgaged according to the law; (3) Educational facilities, medical and health facilities of schools, kindergartens, medical institutions and other non-profit legal persons established for public welfare purposes and other public welfare facilities; (4) properties whose ownership and use rights are unknown or in dispute; (5) properties that have been sealed, detained, and supervised in accordance with the law; (6) other properties that are not allowed to be mortgaged according to laws and administrative regulations.

Article 2 of the "Guarantee Law of the People's Republic of China" In economic activities such as lending, buying and selling, transportation of goods, processing and contracting, if a creditor needs to guarantee the realization of its creditor's rights in the form of guarantee, it may do so in accordance with this provision. The law provides for the creation of guarantees.

The guarantee methods specified in this Law are guarantee, mortgage, pledge, lien and deposit.