People with a negative credit rating have difficulty getting a loan. But creditworthiness is not always to blame for the failure of a loan. Income also plays a significant role. If this is too low, it also leads to a loan rejection. In such situations, some banks go over and grant a loan with guarantors. But the guarantor should carefully consider this step. Why is explained below.
What the guarantor needs to know
A guarantor is generally liable for the loan taken out. But it can only be used as a guarantor if it has a sufficient income and there are no negative entries in the credit bureau. Only then is the loan approved. It is important to know in the event that the guarantor is jointly and severally liable.
If, for whatever reason, the borrower can no longer pay the installments, the guarantor must step in. There’s no way around it. A guarantor is a great security for the banks, because an elaborate dunning and enforcement procedure can initially be avoided with a loan with guarantors. The bank gets its money faster.
Other ways out
The practice of granting a loan with a guarantor is quite rare in Germany. Many people rightly shy away from the risk, because doing so can destroy their creditworthiness. Nobody wants that. In addition, friendships that have been in existence for years have been ruined. It makes more sense to either waive a loan or apply for it abroad. With a so-called Swiss loan, no guarantors are needed. All that counts here is a permanent employment relationship with regular receipt of money. The credit bureau doesn’t matter. A loan from Switzerland is also not reported to credit bureau.
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