A surety is liable for the repayment of a loan if the borrower has become insolvent. The form of guarantee provided by the legislator as a norm, according to which liability only takes effect after unsuccessful execution, is almost always replaced by the joint and several guarantee.
This states that if the borrower is insolvent, the guarantor is liable to pay benefits without the need for an attachment attempt. In contrast to the guarantor, a co-applicant is liable on an equal footing with the main borrower for the repayment of the loan debt. Financial institutions often prefer another applicant to a guarantor, as courts declare guarantees that they are emotionally connected and lacking in performance immoral, while they do not criticize the co-applicant.
Lending without co-applicants or guarantors
If the bank has no concerns about the applicant’s creditworthiness, it will pay out an ordinary loan without guarantor and co-applicant. Borrowers with irregular income or negative entries in their Credit Bureau information, on the other hand, are often asked to provide a co-applicant or a guarantor. With a single soft negative entry, some institutions can take out the desired loan on their own, while other banks generally refuse because of a soft negative feature.
If German financial institutions have rejected the requested loan without guarantor and co-applicant on the basis of the Credit Bureau information, the loan application to a Swiss bank is recommended. This has no access to the Credit Bureau data, but requires a higher minimum income than most German credit providers.
Loan seekers with irregular or different sources of income choose an instant loan without proof of income for a loan without a co-applicant and without a guarantor. The obligation to provide honest information about the level of income remains, and it is possible to form an average income taking into account all payments.
Organized personal loans as an alternative to bank loans
Members registered as donors on Internet platforms for arranging private loans mainly take the specified purpose and social criteria into account when making their lending decisions. They prefer to grant a loan without guarantors and co-applicants to applicants whose loan applications to banks are rejected.
Formally, lending is handled by a licensed full bank for legal reasons and to ensure data protection, but the actual credit decisions are made by the members registered as lenders. Depending on the desired loan amount, it is granted by a single or by several partners.