A guarantor is liable for the loan repayment as soon as the actual borrower can no longer meet his obligations. The usual form of guarantee in the credit system is the self-borrowing. This means that the creditor does not have to make an attachment attempt before contacting the guarantor.
Rather, certain knowledge of insolvency is sufficient to fall back on the guarantor. Through his payments to the lender, the buyer acquires a right of recourse against the borrower, which in many cases cannot be satisfied.
Financial institutions prefer the co-applicant to the guarantee
The loan without a guarantor is the standard case. This is also due to the fact that financial institutions recommend a co-applicant rather than a guarantee if they cannot grant the applicant on their own. This procedure is explained by the strict requirements which courts place on the effectiveness of a loan guarantee. A bank must check the economic performance of a guarantor much more rigorously than that of another applicant and also ensure that the latter actually knows the scope of a guarantee given.
The standards of courts for the effectiveness of a guarantee commitment are particularly stringent in the case of guarantees from relatives, since in this case an emotionally based voluntary obligation to provide guarantees is assumed. There are no comparable concerns of the courts with co-applicants, so that most financial institutions prefer two applicants to one borrower and one guarantor.
If the financial institution insists on a surety
Not every loan applicant can provide a guarantor or a co-borrower. If a requested bank rejects the desired loan without a guarantor and requests one or a co-applicant, another financial institution can nevertheless approve the desired loan. Both the demands on regular labor income and the valuation of individual items in the household account differ significantly between the individual credit institutions.
Another opportunity to get the desired loan without guarantor is provided by platforms for brokering loans between private individuals. For lending on the relevant websites, a precise description of the purpose of a loan and its approval by the lender are more important than the credit rating data, which is largely assessed by banks.