Higher credit opportunities through joint loans
If you have applied for a loan and your application has been quickly rejected by the credit bank, it may be because you do not have the required credit rating. The banks protect themselves against the risk of default and carry out a credit check of the credit applicants. Many banks charge the interest on the loan depending on the credit rating of their borrower. If your loan application is rejected, this not only serves to protect the bank from possible default, but also for your own protection. The banks want to protect the applicants, who do not have a sufficient credit rating, from getting into the debt trap and perhaps the personal bankruptcy. If you can not provide the required collateral for the granting of credit, you still do not always have to give up a loan because you can bring your partner on board or make a guarantor.
Better credit opportunities with a co-applicant
Having a co-applicant gives you better chances of getting a loan; The prerequisite is that the co-applicant meets the requirements for creditworthiness and can provide collateral. As a rule, the co-applicant is the main applicant’s partner, it does not matter if the two partners are married or not. It depends on a corresponding income for the lending, so that the current expenses can be covered and the borrower also has enough money left for life and for unforeseen expenses. If both partners can demonstrate a solid income and, ideally, also have collateral in the form of life insurance, time deposits or real estate, then the chances of a loan are good.
As banks often set lending rates based on the applicant’s credit rating, you can often save on borrowing costs. Particularly with loans with a high sum, as is the case with mortgages and real estate loans, you have better chances with a co-applicant. Even with smaller loans such as modernization loans or simple installment loans, a co-applicant can significantly improve the opportunities. This is particularly the case if you are on a low income because you are still in education, studying or living a financial drought due to unemployment.
The co-applicant is jointly and severally liable. If you are the main borrower in financial difficulties, the co-applicant will be asked by the lender to pay installments. The co-applicant vouches with his signature on the loan application to take over the payment obligations of the main applicant. You, as the main applicant, but also the co-applicant, have to submit various credit check documentation with the credit agreement – bank statements and proof of income are included.
What happens during a partnership separation?
If your partner has agreed to sign the loan application as a co-applicant, it can always come for different reasons to a separation. If that’s the case then you have to stick together for the full amount. The creditor decides from whom he demands repayment of the remaining debt. It is now important to regulate a fair distribution of debts to both partners. If you were not married, you can agree with the ex-partner that he will pay you half of the installments if the bank has chosen you to pay the installments. In a divorce, the balance between the two spouses can be regulated by a lawyer, here the shared debts must be taken into account in part in the calculation of spousal maintenance.
The guarantor – a sensible alternative
If you can not meet the credit rating requirements and do not live in partnership, you do not always have to give up your hopes for a loan. An alternative to the co-applicant is the guarantor – this can be someone from your family, but also a good friend, who can prove the corresponding collateral. The guarantor does not legally have the same status as a co-applicant, but it can significantly increase your chances of getting a loan. It is important that the guarantor has a very good credit rating. He should therefore be able to prove a correspondingly high income or valuables, real estate or life insurance. It is important that the guarantor has no negative entry at the Schufa. If you, as a borrower, can no longer pay the installment for your loan, then the bank turns to the guarantor, who then has to pay the installment. However, when you are a guarantor, the terms of a loan are usually not as good as with a co-applicant.