If a consumer applies for a loan and his creditworthiness is insufficient, the loan can be secured with a guarantee. The bank attaches particular importance to a guarantee if it is a large loan amount that has a long term. However, it is not easy to find a solvent guarantor. In the past, it was mostly family members who guaranteed a loan, but this has decreased somewhat. A guarantee was not uncommon and in the worst-case scenario the guarantor could not be reclaimed. The family member had no income at all. The court has now classified these guarantees as immoral.
The loan with guarantee – the guarantees
A guarantor has been comprehensively examined by the bank since this incident. The guarantor should know that a guarantee is a risk. He vouches for someone else’s debt and has to pay the debt in full in the event of a loan default. A surety should know that there are several versions of a guarantee. The type of guarantee determines which rights and obligations he has.
The default guarantee
A default guarantee is a common form that is required by law. Here, the guarantor can only be held responsible if practically nothing can be obtained from the debtor. He must have gone through all legal instances until enforcement.
The personal guarantee
In this guarantee, the guarantor is treated as the debtor. It does not matter whether the debtor is insolvent. The guarantor must then reclaim his money from the borrower.
The duration and the maximum amount of a guarantee
If there is no special agreement, the guarantor has unlimited liability for the term as well as unlimited liability. Anyone who gives a surety is liable until the loan is paid. If the loan is not serviced, the interest burden increases. Therefore, someone who offers a guarantee should try to agree a term and a limit on the loan debt. This way he knows how long he has to guarantee and for what amount.
Banks have no interest in these restrictions. There is also an ineffective guarantee. Such is the global guarantee, where the guarantor must also be liable for unknown claims and claims that will arise in the future.
Guarantees that have been mentioned by penniless spouses and relatives have proven immoral. Even if the guarantee exceeds the performance of the guarantor, the guarantee is immoral.
The guarantee is also ineffective if the guarantor is not fully informed about the guarantee. If, for example, the harmlessness of a guarantee is considered when the guarantee contract is concluded. Inexperienced consumers in particular should not be fooled.
The loan with a guarantee – the conditions
The borrower should know that clear conditions must be met before banks approve loans. So the borrower must have a sufficiently high income. His Credit Bureau must be clean and there must be a permanent position. The income must be so high that the borrower can easily pay the loan and the interest. If there is any doubt about the customer’s creditworthiness, the bank will reject the loan.
In general, anyone can provide a guarantee. Only creditworthiness is the decisive factor when it comes to guarantor. As a guarantor, parents can provide a guarantee for children, grandparents or their life partner. However, a loan with a guarantee is a rather rare form of credit protection. Banks prefer a co-applicant or second borrower. This loan is easier to approve and there is no need to issue a guarantee contract. The loan seeker can also take out a surety loan online with two or more borrowers.
If the need for credit is now urgent, the borrower can name a guarantor for the loan. The guarantor can be found among relatives or friends. The conditions on the guarantor are the same as for the borrower. A sufficient income, a clean Credit Bureau and a permanent position. Usually, the income of the loan seeker is security. The loan can also be secured with a guarantee with real estate or a loanable loan.
The loan with a guarantee is not a small walk for the guarantor. He should always be aware of this before signing the loan with a guarantee. Whereas in the past it was more the large loan amounts that were secured, banks now also require a guarantee for a small loan if the income is insufficient.
Alternatives to the guarantee
Banks regard the bank guarantee as a high level of credit protection. So there are guarantees from federal states to secure loans from companies. With a personal loan, on the other hand, a guarantee is often necessary if the borrower’s creditworthiness is insufficient, ie the income cannot cover the installments. Ultimately, whether a guarantee is legal depends on the financial situation or reasonableness of the guarantor. For this reason, the guarantor’s economic situation is comprehensively examined.
An alternative to the guarantee is the naming of a second applicant. Securing the loan is easier, and the borrower does not need to worry whether he is emotionally connected to the second borrower. The borrower can decide with whom he takes out a joint loan. The borrower should know that a loan with a guarantee often has better terms than without. The situation with a second borrower or second applicant is also presented.
This means that pensioners and housewives can also take out a loan without having to name a guarantor. In the case of a loan with a second borrower, both borrowers are obliged to repay debts at the same time. What many guarantors do not know, the guarantee does not end when the testator dies. The heirs not only inherit the property but also the guarantee. The guarantee is accepted as agreed.
The loan with guarantee can be applied for just like any other loan. This can be at the house bank or at the many online banks. The bank checks the creditworthiness and, if necessary, requests credit protection. The borrower can decide whether to opt for a surety or for a second borrower. The banks prefer to see the latter because the eventual loss of installments must then be paid for by two debtors.