Guarantee vs. Security — What's the Difference?
By Fiza Rafique & Urooj Arif — Updated on April 2, 2024
Guarantee implies a promise of assurance by one party to another, while security refers to an asset pledged to ensure the fulfillment of an obligation.
Difference Between Guarantee and Security
Table of Contents
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Key Differences
A guarantee is often a verbal or written promise made to ensure that certain conditions will be met or that a product or service will meet specified standards. This assurance is typically used to build trust between parties in transactions. Whereas, security, in a financial context, refers to a financial asset, such as stocks, bonds, or property, used as collateral to back a loan or other credit agreement. This means that if the borrower fails to repay the loan, the lender can seize the asset to recover the loss.
Guarantees are commonly used in sales and services to assure customers of the quality or performance of a product. For example, a manufacturer might offer a money-back guarantee if a product fails within a certain period. On the other hand, securities are used in financing and investment, where they represent ownership in a company (stocks), a debt agreement (bonds), or other financial instruments that can be bought and sold.
In the case of guarantees, the emphasis is on the assurance of performance or quality without the necessity of holding a physical asset as backing. Guarantees are more about trust and credibility between the provider and the recipient. Whereas securities involve tangible or financial assets that have a market value and can be traded or liquidated in case of default on an obligation.
Guarantees can be personal or corporate, meaning they can be provided by individuals or entities. They are often unconditional and can cover a wide range of situations. Security, however, is strictly financial and is concerned with assets, requiring valuation and legal documentation to enforce.
Comparison Chart
Definition
An assurance by one party to another about a product or service's quality or performance.
An asset used as collateral to back a loan or credit agreement.
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Primary Use
To instill confidence in the quality or performance of a product or service.
To provide a financial safety net for lenders against default.
Nature
Non-tangible assurance, often based on trust and credibility.
Tangible or financial asset with market value.
Legal Aspect
May or may not involve a formal contract.
Involves a legal claim on assets, regulated by financial laws.
Type
Can be personal or corporate.
Primarily financial, involving assets like stocks, bonds, or property.
Compare with Definitions
Guarantee
A pledge to ensure satisfaction.
Our service comes with a satisfaction guarantee or your money back.
Security
Tradable financial asset.
The financial advisor recommended diversifying the portfolio with various securities.
Guarantee
Assurance of quality or performance.
The blender comes with a one-year guarantee against manufacturing defects.
Security
Financial asset used as collateral.
The borrower offered his property as security for the loan.
Guarantee
A mechanism to provide security against failure.
The warranty acts as a guarantee for the product's reliability.
Security
Protection against financial loss.
The lender required additional securities to approve the loan.
Guarantee
Promise or assurance provided by one party to another.
The contractor gave a guarantee that the work would be completed on time.
Security
An instrument representing a stake in a financial venture.
Investors bought securities in the company to gain a share of the profits.
Guarantee
A legal commitment to fulfill an obligation.
The parent company provided a guarantee for the subsidiary's debt.
Security
Legal interest in physical or financial assets.
The bank holds a security interest in the financed vehicle.
Guarantee
Stand behind and guarantee the quality, accuracy, or condition of;
The dealer warrants all the cars he sells
I warrant this information
Security
Security is freedom from, or resilience against, potential harm (or other unwanted coercive change) caused by others. Beneficiaries (technically referents) of security may be of persons and social groups, objects and institutions, ecosystems or any other entity or phenomenon vulnerable to unwanted change.
Guarantee
Guarantee is a legal term more comprehensive and of higher import than either warranty or "security". It most commonly designates a private transaction by means of which one person, to obtain some trust, confidence or credit for another, engages to be answerable for him.
Security
Freedom from risk or danger; safety.
Guarantee
A formal assurance (typically in writing) that certain conditions will be fulfilled, especially that a product will be repaired or replaced if not of a specified quality
The treaty provides a guarantee of free trade
We offer a 10-year guarantee against rusting
Security
Freedom from doubt, anxiety, or fear; confidence.
Guarantee
An undertaking to answer for the payment or performance of another person's debt or obligation in the event of a default by the person primarily responsible for it.
Security
A group or department of private guards
Call building security if a visitor acts suspicious.
Guarantee
Provide a formal assurance, especially that certain conditions will be fulfilled relating to a product, service, or transaction
The company guarantees to refund your money
Security
Measures adopted by a government to prevent espionage, sabotage, or attack.
Guarantee
Promise with certainty
No one can guarantee a profit on stocks and shares
Security
Measures adopted, as by a business or homeowner, to prevent a crime such as burglary or assault
Security was lax at the firm's smaller plant.
Guarantee
Something that assures a particular outcome or condition
Lack of interest is a guarantee of failure.
Security
Measures adopted to prevent escape
Security in the prison is very tight.
Guarantee
A promise or assurance, especially one given in writing, that attests to the quality or durability of a product or service.
Security
Something deposited or given as assurance of the fulfillment of an obligation; collateral.
Guarantee
A pledge that something will be performed in a specified manner.
Security
One who undertakes to fulfill the obligation of another; a surety.
Guarantee
A guarantor.
Security
A financial instrument, such as a stock or bond, representing rights of ownership or creditorship and often traded in secondary markets.
Guarantee
A guaranty.
Security
(uncountable) The condition of not being threatened, especially physically, psychologically, emotionally, or financially.
Chad always carries a gun for his own security.
The pink blanket gives little Mary lots of security.
Guarantee
To assume responsibility for the debt, default, or miscarriage of.
Security
(countable) Something that secures.
Guarantee
To assume responsibility for the quality or performance of
Guarantee a product.
Security
An organization or department responsible for providing security by enforcing laws, rules, and regulations as well as maintaining order.
Pamela works in security.
Guarantee
To undertake to do, accomplish, or ensure (something) for another
Guaranteed to free the captives.
Guarantees freedom of speech.
Security
(legal) Something that secures the fulfillment of an obligation or law.
Guarantee
To make certain
The rain guarantees a good crop this year.
Security
(legal) Freedom from apprehension.
Guarantee
To guaranty.
Security
A tradeable financial asset, such as a share of stock.W
Guarantee
To furnish security for.
Security
(finance) Proof of ownership of stocks, bonds or other investment instruments.
Guarantee
To express or declare with conviction
I guarantee that you'll like this book.
Security
(finance) Property etc. temporarily relinquished to guarantee repayment of a loan.
Guarantee
Anything that assures a certain outcome.
Can you give me a guarantee that he will be fit for the match?
Security
A guarantee.
Guarantee
A legal assurance of something, e.g. a security for the fulfillment of an obligation.
Security
(obsolete) Carelessness; negligence.
Guarantee
More specifically, a written declaration that a certain product will be fit for a purpose and work correctly; a warranty
The cooker comes with a five-year guarantee.
Security
The condition or quality of being secure; secureness.
His trembling hand had lost the ease,Which marks security to please.
Guarantee
The person to whom a guarantee is made.
Security
Hence, carelessness; negligence; heedlessness.
He means, my lord, that we are too remiss,Whilst Bolingbroke, through our security,Grows strong and great in substance and in power.
Guarantee
(colloquial) A person who gives such a guarantee; a guarantor.
Security
That which secures or makes safe; protection; guard; defense.
Those who lent him money lent it on no security but his bare word.
Guarantee
To give an assurance that something will be done right.
Security
Freedom from risk; safety.
Give up yourself merely to chance and hazard,From firm security.
Some . . . alleged that we should have no security for our trade.
Guarantee
To assume or take responsibility for a debt or other obligation.
Security
One who becomes surety for another, or engages himself for the performance of another's obligation.
Guarantee
To make something certain.
The long sunny days guarantee a good crop.
Security
An evidence of debt or of property, as a bond, a certificate of stock, etc.; as, government securities.
Guarantee
In law and common usage: A promise to answer for the payment of some debt, or the performance of some duty, in case of the failure of another person, who is, in the first instance, liable to such payment or performance; an engagement which secures or insures another against a contingency; a warranty; a security. Same as Guaranty.
His interest seemed to be a guarantee for his zeal.
Security
The state of being free from danger or injury;
We support the armed services in the name of national security
Guarantee
One who binds himself to see an undertaking of another performed; a guarantor.
Security
A formal declaration that documents a fact of relevance to finance and investment; the holder has a right to receive interest or dividends;
He held several valuable securities
Guarantee
The person to whom a guaranty is made; - the correlative of guarantor.
Security
A department responsible for the security of the institution's property and workers;
The head of security was a former policeman
Guarantee
In law and common usage: to undertake or engage for the payment of (a debt) or the performance of (a duty) by another person; to undertake to secure (a possession, right, claim, etc.) to another against a specified contingency, or in all events; to give a guarantee concerning; to engage, assure, or secure as a thing that may be depended on; to warrant; as, to guarantee the execution of a treaty.
The United States shall guarantee to every State in this Union a republican form of government.
Security
Measures taken as a precaution against theft or espionage or sabotage etc.;
Military security has been stepped up since the recent uprising
Guarantee
A written assurance that some product or service will be provided or will meet certain specifications
Security
Defense against financial failure; financial independence;
His pension gave him security in his old age
Insurance provided protection against loss of wages due to illness
Guarantee
A pledge that something will happen or that something is true;
There is no guarantee that they are not lying
Security
Freedom from anxiety or fear;
The watch dog gave her a feeling of security
Guarantee
A collateral agreement to answer for the debt of another in case that person defaults
Security
An electrical device that sets off an alarm when someone tries to break in
Guarantee
Give surety or assume responsibility;
I vouch for the quality of my products
Security
Property that your creditor can claim in case you default on your obligation;
Bankers are reluctant to lend without good security
Guarantee
Make certain of;
This nest egg will ensure a nice retirement for us
Preparation will guarantee success!
Security
A guarantee that an obligation will be met
Guarantee
Promise to do or accomplish;
Guarantee to free the prisoners
Common Curiosities
What is a guarantee?
A guarantee is a promise or assurance, typically related to the quality or performance of a product or service.
Can guarantees be transferred?
Guarantees are generally not transferable unless explicitly stated in the terms of the guarantee.
Are securities always tangible?
Securities can be tangible, like real estate, or intangible, like stocks and bonds.
Is a guarantee legally binding?
Guarantees can be legally binding, depending on the terms of the agreement and local laws.
What is the difference between a guarantee and a warranty?
A guarantee is a broad assurance of satisfaction, while a warranty specifically refers to the repair or replacement of defective items within a certain period.
Can an individual provide security for a loan?
Yes, individuals can offer personal assets as security for loans.
What does security mean in finance?
In finance, security refers to a financial asset that can be traded and is used as collateral to secure loans or other financial obligations.
What is the role of a guarantor?
A guarantor is a person or entity that provides a guarantee, promising to fulfill an obligation if the primary party fails to do so.
How does a guarantee work?
A guarantee works as a pledge that certain conditions will be met, such as the quality of a product or the completion of a service.
What types of assets can be considered securities?
Stocks, bonds, and real estate can all be considered securities when used as collateral for loans or as investment instruments.
How are securities valued?
Securities are valued based on market conditions, including demand, financial health of the issuer, and overall economic factors.
Do securities need to be registered?
Some securities, especially those traded on public markets, need to be registered with financial regulatory bodies.
Can a company be both a guarantor and a provider of security?
Yes, a company can act as a guarantor for an obligation and also provide assets as security.
Are all securities considered liquid assets?
Not all securities are liquid; their liquidity depends on the ease with which they can be bought or sold in the market.
What happens if a guarantee is not fulfilled?
If a guarantee is not fulfilled, the guarantor may be legally required to compensate the aggrieved party.
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Written by
Fiza RafiqueFiza Rafique is a skilled content writer at AskDifference.com, where she meticulously refines and enhances written pieces. Drawing from her vast editorial expertise, Fiza ensures clarity, accuracy, and precision in every article. Passionate about language, she continually seeks to elevate the quality of content for readers worldwide.
Co-written by
Urooj ArifUrooj is a skilled content writer at Ask Difference, known for her exceptional ability to simplify complex topics into engaging and informative content. With a passion for research and a flair for clear, concise writing, she consistently delivers articles that resonate with our diverse audience.
