At the very beginning of Mintos, we considered several names for the commitment from the lending companies to buy back loans in case of a borrower default. Eventually, the term “buyback guarantee” was chosen as we considered it a widely used legal term, understandable to all involved parties.
Over time, we’ve noticed comments and received feedback from investors saying that the word “guarantee” is misleading.
To address that, at first we created a separate FAQ about the buyback concept, as well as clarified the risk involved on the Mintos investing and risk page when disclosing the lending company risk under risks of investing.
However, we’ve come to an understanding that not all investors will be immediately aware of such details and that the word “guarantee” might indeed be perceived incorrectly, at least in the context of investing in loans.
Making it clearer for everyone
To more accurately describe the contractual obligation from the lending company and the risk involved when investing in loans, we’re changing the word “guarantee” to “obligation” on the Mintos platform and in our communication with investors.
• Only the word “guarantee” is being changed, and the buyback concept remains as before.
• The change of the words on the Mintos platform does not amend the legal agreements.
About buyback obligation
Buyback obligation (previously “buyback guarantee”) is a contractual obligation under which a lending company on Mintos is obliged to buy back the investment at the nominal value plus accrued interest in case the loan is more than 60 days late.
Currently, 99% of loans on Mintos come with a buyback obligation. For these loans, investors can see the “buyback strength” subscore to evaluate the buyback provider’s ability to honor the buyback obligation. Learn more about it on the Mintos Risk Score page.
You can also find more information about the buyback obligation in the Mintos Help.