Take out a loan with a second borrower
Taking out a loan creates financial flexibility and is particularly interesting in times of low interest rates. Kreditexperte offer you the possibility to compare loans easily and comfortably to get the best possible conditions. Before taking out a loan, however, you should also consider the options for taking out a loan. So it is possible to take up a liability together with a second borrower. But what are the legal consequences for the contract, what are the advantages for the borrower and are there also risks with this model?
Why should you take a loan with a second borrower?
As soon as two contracting parties decide to take out a loan together, both borrowers are considered equally obligated contracting parties. This means that both are also responsible for the repayment of the total loan.
Despite the equality in liability, a formal distinction is still made in the main and secondary debtor. As a rule, the credit seeker with the lower credit rating is considered the main debtor, whereas the secondary debtor has a higher credit rating. In most cases, the loan applicant is also the main debtor.
What are the advantages of having a second borrower in the loan application??
Now the question arises why it can make sense to involve a second borrower at all. This question can be easily answered superficially. By adding a second borrower, the credit seeker can significantly increase his creditworthiness and subsequently obtain loans that the bank might not otherwise grant him.
There are however still further advantages from this procedure. Thus on the one hand the credit interest sinks, since the lender with a smaller default risk calculates and in the consequence in the position is to offer better credit offers. Since both borrowers are jointly and severally liable for the installment loan, the bank could, in the worst case, claim the remaining debt from both borrowers. What sounds so bad here is not the rule in everyday life. Most loans are repaid accordingly over the term in an orderly manner.
Who should rely on a second borrower?
A second borrower is always useful if your own credit rating is not exactly the best. However, this does not mean any SCHUFA entries, but the monthly income. Because every loan must of course be paid off, which is why banks require a small household bill. Even if one gets along with the money in the month, it may not be enough for the for a loan.
At the point a second borrower with his income can realize the required credit. Because his salary is also taken into account in the loan application. Especially for married couples, the joint loan application, because the better credit rating can lead to favorable loan interest rates. At this point, however, it should be noted that it is not sufficient to include only a second person in the loan application. This person must have an appropriate credit rating.
What requirements must the second borrower meet?
When checking creditworthiness, financial institutions check the creditworthiness of both borrowers. Accordingly, the second borrower must, for example, also have a good credit rating
- be legally capable and resident in Germany,
- have a regular income,
- as well as confirm his identity.
In addition, the lender checks whether it can be assumed that the creditworthiness of the second borrower could actually absorb the risk of insolvency.
What risks does the second borrower take with the guarantee??
The 2. Borrowers should be aware that they are liable for repayment of the remaining debt over the term of the loan. With married couples this is certainly less problematic than for friends or acquaintances. If one should go apart approximately in the controversy, still exists the received obligation for the credit.
At the same time one should consider as a guarantor very well whether one should make its creditworthiness available to the respective person. In the case of people with a low payment record, you should think very carefully about it. Furthermore, you should also be aware that such a guarantee also reduces your own creditworthiness. If you want to take out a loan yourself, such a loan guarantee can have a negative impact on the loan interest because the full creditworthiness is no longer available.
Can the second borrower subsequently still get out of the loan agreement??
If the second borrower wishes to withdraw from the contract, this is possible only with the consent of the lender. The latter is usually granted by banks only if the current overall financial situation of the first borrower ensures that a sole repayment of the loan is guaranteed. You should therefore think about this option before signing the contract and, if necessary, make contractual arrangements with your lender.
Overall, it therefore often makes sense to take out a loan with a second borrower. In particular, the secondary debtor should, however, inform himself in advance about the risks and ensure that the relationship of trust with the first borrower allows such a contract. Subsequently, you will then find a suitable loan, whether they are alone or together with a second borrower looking for.