In spite of private credit, bank customers call a loan, which they receive despite an existing negative contribution. In contrast to a loan without private credit, the bank makes a solicitation request and agrees to the lending despite the negative feature.
The chances of a loan despite private credit can increase by a guarantor, as this is also liable for the loan repayment. In this case, the lawmakers actually provide the deficiency guarantee, while the banks almost always demand a deficiency guarantee. This allows them to gain access to the guarantor without first performing an inconclusive forced operation.
Not every bank points to borrowing with a guarantor without an explicit demand, so that a concrete demand is worthwhile. In part, financial institutions offer the re-application of an unauthorized loan with a guarantor in the refusal letter.
Which conditions should the guarantor fulfill?
Bank customers are sometimes surprised when the requested financial institution does not want to secure a loan despite private credit by a guarantor, but instead recommends the joint application. The explanation for this behavior is the tendency of courts to refuse loan guarantees by private individuals who are inexperienced financially, which is particularly pronounced if the guarantor is emotionally attached to the borrower. At the very least, the bank has to fully inform a guarantor about the risks involved, while in the case of a co-applicant it only has to carry out the usual budgetary account.
The obligation to convince oneself of the economic knowledge of the guarantor makes the acceptance of an independent or freelance guarantor meaningful. However, this principle is opposed by the tendency of some financial institutions to lend only to persons with earned income from employment and to presuppose this to co-applicants and guarantors. The best opportunities to secure a loan despite private credit by a guarantor, thus provide the financial institutions, the self-employed and freelancers as a borrower as well as a loan guarantee.
On the online platforms for lending between private individuals there is the possibility to secure a loan despite private credit by a guarantor. In most cases, additional credit security through a guarantee on organized personal loans is only necessary if the borrower receives extremely low or extremely irregular income in addition to the weak credit rating. In many cases it is possible to apply for a loan without a guarantor on a private lending platform even if private credit is bad.
What does the guarantee mean?
If a loan is secured by a guarantor in spite of private credit, the latter undertakes to settle the liability if the actual borrower is unable to do so. A loan guarantee is therefore not only a favor to the applicant, but also a significant obligation to the bank.
If the guarantor actually enters the loan repayment, he acquires a claim for damages from the actual borrower. In contrast to the claims of the bank, this part of a guarantee does not have to be expressly contractually agreed, but in principle also applies.
Whether the guarantor can enforce the claim against the actual borrower is questionable. On the one hand, a personal bankruptcy leads to a discharge of goodwill and on the other hand, most people feel uncomfortable when they have to enforce a financial claim against a friend or relative in a court of law.
What do borrowers and guarantors pay attention to when comparing loans?
It goes without saying that a loan should be as cheap as possible, despite private credit being secured by a guarantor. An inexpensive loan can be found by a loan comparison, for which numerous banks give a guideline value and the final one in the case of a loan guarantee Calculate interest rate based on the credit ratings of the borrower and the guarantor after a specific request.
A favorable interest rate, however, is only one of the decision criteria for a loan despite private credit and a guarantor. Equally important are sufficiently low loan installments that the borrower can with sufficient probability pay off from his own income. The monthly installment can easily be reduced by extending the term of the loan, which in turn increases the length of the guarantee liability.
Additional protection for the guarantor against a claim is provided by an eradication plan, which allows a pause break every twelve to twenty-four months. In this case, the borrower is not in default due to a temporary economic imbalance, so the guarantor does not have to be liable. Similar protection as the right to an occasional suspension of installments is provided by contractual clauses according to which the lender expressly agrees to a modification of the repayment plan in the case of a legitimate customer request. Less reliable than a clear contractual agreement are customer reports on the fundamentally accommodative behavior of a bank against a corresponding request. Although these are mostly correct, they do not offer the certainty that the financial institution will continue to behave as it does today in a few years’ time.
Few clients will benefit from the right to a free special repayment if the loan is secured by a guarantor. Nevertheless, its agreement is recommendable, so that the guarantor will be released prematurely from his responsibility due to the early repayment.
If a loan is secured by a guarantor despite private credit, the guarantee ends with the repayment of that debt. A permanent guarantee for the current and other liabilities is possible in principle, but not in the interest of the guarantor. For this reason, a credit bureau restricts its liability to the loan currently being disbursed despite the applicant’s private credit negative entry.