If you only have a low income, you have little chance of getting a loan. A partner loan, where a co-borrower signs the loan application, can significantly increase the chances of getting a loan. Creditworthiness increases, which can lead to lower interest rates. The banks benefit because the risk of default is lower. It is important for such a loan that both borrowers live together in the same household.
A partner loan – what is it??
This is important
Some banks require the loan application to be signed by both spouses, especially for higher loan amounts. This is not required by law, but is at the discretion of the banks. The banks secure themselves with the spouse as a co-debtor against a possible payment default. The spouse steps in as a second borrower.
Both partners must meet their obligations as debtors. If you want to take out a loan, however, you are not obliged to have your spouse sign as a second applicant. If you do not agree or your spouse refuses to sign, you can look for another bank that does not require the spouse's signature.
Tip
However, a co-borrower can be helpful if you have low income and are having difficulty getting a loan. If your partner meets the requirements for creditworthiness, this increases your chances.
A partner loan is offered by various banks. This is a loan where both partners sign the loan application and act as borrowers. The prerequisite is that both partners live in the same household. You do not have to be married. The lender must recognize that both partners are jointly responsible for the budget.
You can also have your partner sign as a co-debtor if you yourself have no income. Both signatories of the loan application step in as debtors and must ensure that the loan installments are repaid on time.
Co-debtor is not to be confused with guarantor
Attention!
A partner loan is not a loan with a guarantor. The partner who signs the credit application together with you is the co-applicant and, if the credit is granted, becomes a co-debtor. He is not a guarantor, but the second borrower. He has the same obligations as a debtor as you yourself.
With a partner loan, both partners are liable for each other. However, it does not matter later who ultimately pays the installments. If you and your partner run the household together, but have separate accounts, you can decide from which account the installments for the loan will be paid.
In contrast, the guarantor only has to be liable if the borrower can no longer pay the installments. The guarantor is not a co-debtor. Parallel to the loan agreement with the borrower, the bank concludes a guarantee agreement with the guarantor, in which it is determined whether the guarantor will stand in for the entire loan amount or only for parts of it with his assets if the borrower does not meet his obligations.
In the case of a partner loan, a situation similar to that of a guarantor arises for the partner who signs the loan application as the second applicant and later also signs the loan agreement together with you as the second borrower. If you want to take the loan for yourself and pay from your account, the partner, just like the guarantor, must step in as a debtor if you can no longer pay the installments.
Partner credit vs. Loan with a guarantor
Partner credit: With a partner credit, both parties are liable for each other. The partner as a co-applicant becomes a co-debtor and has the same obligations as the debtor itself.
Loan with guarantee: With a guarantee, the guarantor is liable only if the actual borrower can no longer pay the installments.
Better credit rating with the partner credit
Before a bank grants a loan, it checks the creditworthiness of the applicant. It secures itself against a possible payment default. No credit is granted in case of a bad credit rating. The bank protects not only itself, but also the loan applicant. The applicant is protected from a high level of debt and, in the worst case, from personal insolvency. The income of the loan applicant is used in the creditworthiness check. The applicant must also declare his regular financial obligations.
Overview of possible financial obligations:
Living expenses such as electricity, gas, water, telephone, Internet maintenance to divorced spouse or children
If the bank does not consider the difference between income and expenses adequate to cover the loan installments, it may reject the loan application. In addition, the bank obtains a Schufa information. If there is a negative Schufa entry, the loan application will also be rejected.
Many banks charge interest depending on the creditworthiness of the applicant. A bad credit rating means high interest rates. A co-borrower can significantly improve your credit rating. The bank can also decide on the basis of creditworthiness whether the desired loan amount is too high. In this case, you can try to apply for the loan with a lower amount.
With a partner loan, the bank checks the income of you and your partner and deducts the joint regular expenses from it. This is not yet a guarantee that the loan will actually be granted. If the total income of both partners is low and there are high regular expenses, this means a bad credit rating. In some cases, the co-debtor may not improve the credit rating, but even worsen it. You should check this carefully before applying for a partner loan.
Advantages with the co-debtor
This is important
The advantages of a partner loan are based on the improvement of the credit rating, if the partner's income is correspondingly good. For the borrower it means – better chances to get a loan – possibility to take the loan with a higher sum – lower interest rates.
If you want to save interest, you should apply for the partner loan at a bank where the interest rates are determined based on creditworthiness. Depending on your creditworthiness and the bank, you can save several hundred euros in interest per year if the interest rate is based on your creditworthiness. This is noticeable in the case of loans with a large sum and a long term. Some banks also set interest rates regardless of creditworthiness. A loan application to such a bank makes sense if your partner as co-debtor also has only an average credit rating.
A partner loan can be beneficial not only for you as a borrower, but also for the bank. If both debtors have a good credit rating, the risk of default for the bank is reduced. This means double security for the bank. The bank is then more willing to grant a loan.
What to do in case of negative Schufa?
If you have a negative Schufa entry, you have no chance of getting a loan from German credit institutions. You should not make the mistake and apply for a loan without Schufa. Often behind such offers are dubious institutions that lure with fabulously favorable conditions. They often charge a high fee even if no credit is arranged at all.
However, there are some reputable intermediaries who work with foreign banks. As a rule, such loans are characterized by high interest rates. With a negative Schufa entry, you can apply for a partner loan if the co-debtor does not have a negative Schufa entry. However, this worsens the credit rating for both applicants and can lead to higher interest rates.