What is the difference between a financial guaranty and a financial warranty?

What is the difference between a financial guaranty and a financial warranty Introduction: The World of Financial Assurances Hello everyone, and welcome to our video on financial guaranties and financial warranties. In the realm of finance, these terms often come up when discussing various transactions and agreements. While they may sound similar, they have distinct meanings and implications. Today, we'll explore these differences and understand why they matter in the world of finance. Defining Financial Guaranties Let's start by defining a financial guaranty. In simple terms, it's a promise made by one party to assume the financial obligations of another party in case of default. This means that if the party responsible for a debt or payment fails to fulfill their obligation, the guarantor steps in and covers the amount. Financial guaranties are commonly used in situations like loans, bonds, or even lease agreements. They provide an added layer of security for the lender or the party on the receiving end of the payment. Understanding Financial Warranties On the other hand, a financial warranty is a statement or assurance made by one party to another regarding the accuracy, quality, or condition of a financial product or service. It's essentially a guarantee that the product or service will perform as expected.