Banks check the creditworthiness of the borrower if they are to grant a loan. It is seen on the regular income, whether this income is not endangered. One reason can be unemployment, for example. But old and existing loan agreements are also included in the appraisal process. The borrower was able to service the loan agreements on a regular basis or these contracts were not fulfilled.

The guarantee contract

Two legal transactions are concluded. A loan agreement between the borrower and the lender. This contract contains the amount of the loan amount and the repayment modalities, the interest amount and other regulations.

The second legal transaction is a bond between the borrower and the guarantor. Guarantees are required if the borrower has only limited credit collateral to offer. It regulates what happens when the debtor (borrower) can no longer pay. All repayment modalities for the guarantor will be settled. These are above all the loan amount, the interest and the duration of the repayment.

Often the guarantee contract is secured by a residual debt insurance. The residual debt insurance should help if the guarantor can not pay anymore. The creditor (lender) secures so if the guarantor dies. This is to prevent the repayment default in the event of death.

Example of a guarantee loan agreement

The contract for a joint and several guarantee is concluded between the guarantor and the guarantor (lender).

An agreement for a guarantee is concluded between them. The object of the contract is explained: The guarantor undertakes to secure the creditor’s claims from a principal debt, which must be precisely described, which means the credit agreement between the creditor and the debtor (purchase contract, loan agreement, etc.). The name and address of the debtor are entered in the contract.

The second section then explains that the guarantor refuses to object. Meant are the plea of ​​the advance, the contestability and the accountability according to § 770, 771 BGB.

The amount of the guarantee is called. This is important if only part of the guarantee is to be guaranteed.

The term of the guarantee contract exists until the guarantee loan agreement has been settled in full. and the
Termination possibilities of the guarantee by the guarantor are called. This means the earliest possible termination date for the guarantee contract.

In the event of termination, the claim of the creditor is limited to the amount of the debt due up to the time of termination.

It must be agreed that German law applies. Verbal agreement should not apply. The contract is signed by the creditor and the guarantor.

In which case a guarantee loan agreement should be concluded

For the creditor, the guarantee is always meaningful if the debtor can not repay the loan total. For example, it is foreseeable that the debtor could become unemployed or become ill. This usually means that he loses his income. Lack of collateral, for example, a house that can be sold in the event of insolvency, is another reason to use a guarantor.
Or the debtor has a bad credit rating or an entry in the Private credit is available.

The debtor may seek a guarantee loan agreement if the above problems are clear to him and he wants to abolish them and he knows a guarantor.

Requirements for the guarantor

There are no direct requirements. Any private or public person can vouch. Private individuals often take over the guarantee when it comes to smaller loans. For example, when buying a car. If the guarantor has the necessary funds in hand, the lender accepts it.

The public sector (federal, state, municipalities) act as guarantors. This happens very often in the case that a private person receives a start-up loan from one of the funding programs. The lenders are then public development promotional banks.

The risks of the guarantee loan agreement

The risks of the guarantee loan agreement

From a surety obligations arise. It is the case that a bank often only wants a guarantee if it expects that the risk that the debtor can not repay the loan is great. This also means, if the case arises, that the debtor can no longer fulfill his payment obligations, that the lender will demand payment from the guarantor. The sale of the valuables of the guarantor has thus become probable. These can be houses, securities or other valuables.

Under certain circumstances, a guarantor may not be familiar with the obligations arising from a loan guarantee agreement or may take the guarantee too lightly. He then brings himself into financial problems. The guarantor must therefore know that he can take over the payment obligations of the borrower, if this fails and in such a way that he himself does not get into financial problems.

Also, the borrower should be aware that the lender’s desire for a guarantor means that it is likely that he will not be able to repay the loan. He should consider if there are not other ways of financing.

Advantages and disadvantages of the loan guarantee.

    • Credit despite bad credit

The advantage for the debtor is that he receives a loan even if his creditworthiness or income is low. The borrower also receives a new loan for current obligations from other loans. The terms can be better for the borrower. He may receive lower interest rates.

    • New credit difficult for guarantors

For the guarantor, there are disadvantages. Thus, the guarantee is treated by the Private credit as a loan and can stand in the way of own borrowing.

    • Weighted ratio possible

Since these are long-term financial burdens, it may be that the guarantor does not have access to some of his money when he needs it. The guarantor, after having paid one year, needs the money for his own financial wishes and can not access this because of the guarantee. This then burdens the personal relationship between guarantor and debtor.

Special forms of the guarantee credit

Special forms are the co-guarantee, the post-surety and the counter-guarantee. The co-guarantee is regulated in § 769 BGB.

    • The co-guarantee

Several people jointly vouch for the same guilt. The guarantees can be taken independently or jointly from each other. The individual guarantors are liable together. The creditor may require each guarantor to adhere to the entire debt. If a guarantor pays, the other guarantors are free of guilt.
The guarantor who has paid can demand from the other guarantors that they pay their part of the debt. (§ 774 II and § 426 BGB).

    • The post-guarantee

This guarantee serves to provide a guarantor for the main guarantor so that the main guarantor is assured of his obligations.

The creditor can demand payment directly from the neighboring country. The lender has a legal relationship with both the guarantor and the guarantor. If the principal may not pay, the debtor must pay (§ 774 I sentence 1 BGB).

If the debtor fulfills his repayment obligations, then the creditor’s claim against the principal and the surrogate becomes void.

    • The counter-guarantee

According to the Federal Court of Justice, a main guarantee must exist in order to obtain a counter-guarantee. So first there is a creditor and a debtor. The creditor only gives the debtor money if a guarantor vouches for the debtor. The guarantor is now used because the debtor can not pay off his loan. But if the guarantor can not pay, the return guarantor will be used. He must now pay the claim from the debtor’s credit to the creditor. Contractually, the repatriation is linked to the principal and not to the creditor. Legally, the creditor is the repatriation of the main guarantor.

The debt and the interest

As a rule, the guarantor is liable for the borrower’s total debt as set out in the guarantee contract. This applies to the individual guarantee. The co-guarantee involves several guarantors.
The interest amount results from the loan agreement with the debtor. The guarantor must pay the same interest and the same amount of money as the debtor.

Some usage ideas

driving school apartment deposit New couch
What exactly:

– Driver’s license is one of the first big issues for young people. Many can not afford it alone

– For example, parents can apply for a guarantee loan for their child’s driving school credit

What exactly:

– The first home is a big step in the life of young people, but the deposit is steep

– With a small installment loan, the deposit can be paid without any problems

What exactly:

– the establishment of the first own apartment is not very cheap. If you do not want to go to the rubbish, you need money

– With a loan, for example, the parents can guarantor, for example, the new couch to be paid without any problems

Advantages:
The driver’s license can be made quickly and paid immediately in cash. The cost of a simple installment loan may be cheaper than the funding offered by the driving schools.
Advantages:
Also in this case the parents could step in as a classic guarantor. So the deposit can be paid quickly and easily. The money is not gone, but is available after the lease is over again.
Advantages:
The independent installment loan with guarantors is generally cheaper than the financing conditions in the furniture store. The couch can be paid directly in cash.
Calculation:

Loan amount: 2500 EUR

Effective interest rate: 1.95%

Duration: 24 months

Monthly rate: 106.30 EUR

Total interest: 51.10 EUR

Calculation:

Loan amount: 1,500 EUR

Effective interest rate: 1.95%

Duration: 24 months

Monthly rate: 63.78 EUR

Total interest: 30,66 EUR

Calculation:

Loan amount: 1.250 EUR

Effective interest rate: 1.95%

Duration: 24 months

Monthly rate: 53.15 EUR

Total interest: 25.55 EUR