The prerequisite for obtaining a serious loan is your own credit rating. The prerequisite for a loan to be granted by a bank is first its certainty that the loan can be repaid. For this reason, it is common for a loan or loan to require a guarantor to be appointed, who will then repay the loan when the borrower is no longer able to pay.
The guarantor assumes the obligation towards the bank to then enter a loan and pay it back, even though it has not received any benefits. He is liable for the full amount of the loan plus interest and costs. At this point, banks are happy to put pressure on the applicant to ensure that, although all other requirements are met, they will only get the loan if a guarantor can be drawn on if the borrower is unable to pay. Another possibility is that the bank charges a higher interest rate if no guarantor is mentioned. But this is rather rare, a guarantor will always be preferred.
A project should be started, an existing company taken over, a house built, a car bought, there are many reasons to take out a loan. With any financing, no matter what it is, every borrower should make sure that they have an equity base, especially if they want to start a business. The amount of equity when buying property or building a house is ten percent of the total. You can orientate yourself well.
Proof of income from the last three, sometimes six months, permission to obtain Credit Bureau information if the purchase of a car is to be financed. To get capital for starting or taking over a company, you have to put all cards on the table: How much equity is there? What qualifications can the borrower demonstrate? Is the business plan drawn up conclusive, the profitability forecast for the next three years comprehensible, will the project work economically? When all the documents are complete, the bank checks whether it will grant the loan.
Regardless of whether the potential borrower has all the prerequisites, his project is conclusive, the house he wants to build can be financed without any risk, a bank will always ensure that the repayment of the loan is guaranteed in full and request a guarantor. In most cases, a family member will be a surety.
In the past, this has often led to spouses becoming guarantors even when it was clearly evident that they could never repay the loan themselves through their own income. Here, the legislature put a stop to it and prohibited the so-called “pledge guarantees” and declared it immoral, above all because the scope of the guarantee cannot be recognized by the guarantors and they always want to do the partner a favor. A court will have to clarify whether a guarantee contract is immoral or not.
Getting a loan that is additionally secured by a guarantor is quite possible. But with all zeal, every borrower has to think about whether to impose this on a person close to him. If you are looking for a loan, want to find an institute that would like to go through the project with him, you should make it clear to the interlocutors from the start that only financing without a guarantor will be considered. From the behavior of the bank, he can tell whether she assesses his project so well that she can follow him here. It is possible that the interest rate will be slightly higher because of this, but it is still better than having to name a guarantor.