Aval
Encyclopedia
Aval in Spain, is a joint commitment to payment
of an obligation in favor of the creditor
or beneficiary
. It is granted by a third party, in case the principal debtor does not fulfil the obligation of payment
of a credit title
.
The practice of requesting an aval from a prospective lender has become commonplace since the 2008 global financial cisis.
According to the Oxford English Dictionary
, the word is derived from the French à val ("at the bottom"); according to the Trésor de la langue française
, it is probably an abbreviation of the formula à valoir.
The endorsement implies that a third party, known as a surety
or guarantor, is jointly liable for the full amount of the debt with the principal debtor. The third party (guarantor) commits himself to cover the payment of the amount of the credit title and its interest, in case the original debt
or does not fulfil his or her obligation.
Normally the prospective lender may require a guarantor
for the loan if the prospective borrower's credit is inadequate. This assures the bank or other lender that, if the borrower defaults, the guarantor can be held responsible for the remainder of the loan left unpaid.
Payment
A payment is the transfer of wealth from one party to another. A payment is usually made in exchange for the provision of goods, services or both, or to fulfill a legal obligation....
of an obligation in favor of the creditor
Credit (finance)
Credit is the trust which allows one party to provide resources to another party where that second party does not reimburse the first party immediately , but instead arranges either to repay or return those resources at a later date. The resources provided may be financial Credit is the trust...
or beneficiary
Beneficiary
A beneficiary in the broadest sense is a natural person or other legal entity who receives money or other benefits from a benefactor. For example: The beneficiary of a life insurance policy, is the person who receives the payment of the amount of insurance after the death of the insured...
. It is granted by a third party, in case the principal debtor does not fulfil the obligation of payment
Payment
A payment is the transfer of wealth from one party to another. A payment is usually made in exchange for the provision of goods, services or both, or to fulfill a legal obligation....
of a credit title
Credit history
Credit history or credit report is, in many countries, a record of an individual's or company's past borrowing and repaying, including information about late payments and bankruptcy...
.
The practice of requesting an aval from a prospective lender has become commonplace since the 2008 global financial cisis.
According to the Oxford English Dictionary
Oxford English Dictionary
The Oxford English Dictionary , published by the Oxford University Press, is the self-styled premier dictionary of the English language. Two fully bound print editions of the OED have been published under its current name, in 1928 and 1989. The first edition was published in twelve volumes , and...
, the word is derived from the French à val ("at the bottom"); according to the Trésor de la langue française
Trésor de la langue française
Le trésor de la langue française: dictionnaire de la langue du XIXe et du XXe siècle is a 13-volume dictionary of 19th- and 20th-century French published by the Centre de recherche pour un Trésor de la langue française from 1971 to 1994...
, it is probably an abbreviation of the formula à valoir.
The endorsement implies that a third party, known as a surety
Surety
A surety or guarantee, in finance, is a promise by one party to assume responsibility for the debt obligation of a borrower if that borrower defaults...
or guarantor, is jointly liable for the full amount of the debt with the principal debtor. The third party (guarantor) commits himself to cover the payment of the amount of the credit title and its interest, in case the original debt
Debt
A debt is an obligation owed by one party to a second party, the creditor; usually this refers to assets granted by the creditor to the debtor, but the term can also be used metaphorically to cover moral obligations and other interactions not based on economic value.A debt is created when a...
or does not fulfil his or her obligation.
Normally the prospective lender may require a guarantor
Surety
A surety or guarantee, in finance, is a promise by one party to assume responsibility for the debt obligation of a borrower if that borrower defaults...
for the loan if the prospective borrower's credit is inadequate. This assures the bank or other lender that, if the borrower defaults, the guarantor can be held responsible for the remainder of the loan left unpaid.