A multi-person credit can increase the creditworthiness of the borrower. There are several reasons that require multi-person credit. This may be the wish of a couple, but also emanating from the borrower. The bank sees a positive effect with two or more persons as the credit default risk is reduced.
Briefly survey the most important
- Collecting credit together increases your credit rating and leads to cheaper interest rates
- From a moral point of view, the credit for two persons is advisable only if it pursues a common goal
- Check – without any obligation – whether the joint credit pays off for you
- Simply submit a loan application for the comparison – without risk
Multi-Person Credit – Overview
Mostly a loan is taken out by the borrower and his partner. But even financing for joint projects of parents and siblings or, where appropriate, children of age is not uncommon. In general, it is always possible to take out a loan with several people without a relationship or a close bond. The practice shows the borrowing usually with two persons.
It does not necessarily mean that a loan has to be applied for together. Who now applies for a loan with two people, but only one person has a regular income, the credit can succeed if a second solvent applicant enters into the credit agreement. The bank will check the solvency of several persons. Often, however, it is also a high loan amount and a joint project where two or more people sign the loan agreement together.
Credit with several persons – consideration of the banks
Sometimes smaller loan amounts are not enough. Anyone who wants to buy a new car or has the dream of a home in mind, often requires a loan in five to six figures. However, problems can arise when the income is insufficient to justify lending. Not always the credit rating is crucial.
Basically, it’s the loan installment that needs to be paid month after month. Therefore, the revenue must be correct to the expenditure. The higher the excess that arises after deducting all costs, the higher the likelihood that a loan will be approved. Now, if the loan is taken, and there are several people work, the bill looks different.
Thus, more income per month, the credit rating can increase, so that a loan rate is no longer a major burden.
Credit with several people – prospects
It makes perfect sense, if additional persons sign the loan application, that the default risk decreases. However, these people must have a high solvency. For example, unemployed or recipients of Hartz IV or other social benefits are not accepted as customers or as additional borrowers. With a multi-person loan, borrowers borrow the loan on an equal footing.
This means that they are only taken into account in an emergency. If a borrower can not pay, the other person must pay the loan. If this thing is too tricky, then maximum amounts can be contractually established. In any case, it is better if the money house is informed.
Multi-person credit – better a guarantee
If you can not get a loan without additional collateral like several people, you can also try a solvent guarantor. The guarantor must have a sufficient income, a stable and secure employment and a clean Schufa. The bank will examine this comprehensively. The guarantor is not a second loan, but he gives a guarantee. In principle, however, it is the same process when it comes to an emergency, the guarantor is taken to the duty.
The bank must inform the guarantor but also several borrowers about the risks. For example, in the case of guarantors, the guarantee is entered in the Schufa, which can reduce its credit rating.
Multi-person credit – benefits
When borrowing with two or more persons, borrowers are jointly and severally liable in the event of a loan default. Banks believe that multiple salaries increase credit security.
The bank’s budgetary statement looks that the income available is sufficient to pay a loan installment. If a multi-person loan is chosen, a shorter term can be chosen, which reduces the overall cost of the loan. But not only the costs, also the interest rate can be cheaper. Banks often raise the interest rate when customers choose a longer term.
The credit-based interest charge will always be more favorable with another person. Even with credit offers that have a fixed interest rate, banks provide a discounted effective rate. Even if the second applicant has only a small salary, the joint application for credit can have a more favorable effect.
Multi-person credit – contract terms
Anyone looking for a cheap provider with a credit comparison should know that the terms and conditions for a multiple person loan are the same as for a single borrower. The most important decision-making aid is always the annual percentage rate.
But not only the interest rate should be in focus, but also flexible repayment options. Thus, free special repayments should be allowed without prepayment interest being charged. Likewise, at least once or twice a year should be allowed a pause break. It is also important to choose the right duration.
Banks often raise the interest rate if a long term is chosen, but there are also banks that operate at a single interest rate. The credit comparison also shows the amount of credit. Should it appear too high to the customer, it can be lowered with a longer term.
It may also happen that no credit with several people comes about. Either because people can not be found who sign the credit agreement, on the other hand, because you do not want to let strangers look into his finances. Then there is alternative such as the mention of a solvent guarantor. If there is no guarantor, so could with other collateral credit succeed.
Think of a property that could be used as collateral. Also lendable insurance or savings can be accepted. Banks insist on such collateral if their own creditworthiness is insufficient or if a larger financial project is sought.