A surety is liable for the repayment of a loan if the actual borrower can no longer service it. Financial institutions usually require a surety, so that they can use the guarantor without unsuccessful enforcement measures. Guarantors must not be confused with co-applicants who have the same contractual obligations as the main borrower.
Lending without a guarantor is the norm
Most loan contracts involve unsecured loans because the borrower has an income that is reasonably likely to make repayment or provides collateral. The requirement for a guarantee is based either on an uncertain income situation or on Credit Bureau entries, whereby a single soft negative feature does not lead to the refusal of a loan or the request to provide a guarantor with a good credit rating at all financial institutions.
In the case of negative Credit Bureau characteristics, a loan can be taken out without a guarantor by the applicant opting for a Credit Bureau-free loan from Switzerland. Credit applicants with fluctuating income opt for an instant loan without proof of income, stating the correctly calculated monthly average as household income.
After a one-time registration, you can always apply for a new loan without a guarantor via a platform for private lending, the intended purpose contributing to the lending decision by the members registered as lenders, whereas banks usually do not ask for such loans for consumer loans.
Financial institutions prefer the co-applicant to the guarantor
If there is a need for credit protection by another person, financial institutions prefer to grant the desired loan without a guarantor, but with another applicant. The reason is the extended liability of a co-applicant, which does not differ from the obligations of the main borrower. In the case of several debtors who are equally obliged to pay, the law allows the debtor to collect the debt either from a debtor.
The credit agreement usually provides for a principal debtor, from whose bank details the monthly installments are collected, but the financial institution can contact the co-borrower after a few direct debits. However, a joint and several guarantee can only be realized when the principal debtor’s insolvency becomes apparent.
In addition, in contrast to a joint application for a loan, there is a risk that a court will classify the obligation as immoral. Like the willingness to accept a guarantee, this increases with the degree of emotional bond between the borrower and the guarantor.