The constellations that can arise in the context of borrowing are very different. While one borrower tries to apply for a loan on his own without any help, others choose a loan for 2 people right from the start. One of the reasons for this decision is that a loan with a large volume and a long term is targeted. However, it may also be that the actual borrower is aware of his weak credit rating and therefore tries right from the start to get security and stability in the loan through a co-applicant or guarantor.
But regardless of the motivation, a loan for 2 people is sought. Banks and savings banks will always welcome this type of borrowing and reward them with a particularly favorable annual percentage rate.
Which loans are suitable as a loan for 2 people?
Strictly speaking, a 2 person loan can be used on any type of loan. You will not find a bank that will reject such a constellation. But on the contrary. For banks and savings banks, this type of borrowing provides additional security. A second borrower who can bring a moderate to good credit rating to the loan reduces the risk of default, since the bank receives a second contact person who will deal with problems during the repayment phase can be contacted. And why should the bank miss out on such an offer on the part of the borrowers?
When does a loan make sense for 2 people?
Of course there are also situations in which a loan for two people makes sense or is even important. For example, when large amounts of credit are requested or when the term of the loan is to extend over many years. Such a loan can also be useful if you, as a borrower, do not have a credit rating that is not quite as optimal, and the bank therefore only offers you an unfavorable loan offer. The annual percentage rate is largely based on your credit rating. The better this is, the cheaper the loan will be for you. If you have an insufficient credit rating, the bank will either make no or only an expensive loan proposal. On the other hand, if you add a second person to the loan, your credit rating will increase and the offers from the banks will improve. Provided, of course, that the second person has a good credit rating.
What needs to be considered when applying?
If you want to apply for a loan for up to 2 borrowers, it is important that the second person is involved in the loan decisions as well as in the application from the beginning. After all, she is fully responsible for the loan and must therefore know what she is signing for.
At the same time, this means that not only the loan application and the loan contract have to be signed by both people. All data from both persons must also be available. You must also ensure that you have complete documentation from both borrowers regarding income, home address and consent to query Credit Bureau. Only then will the bank process the loan application and release the money from the loan.
We recommend that you discuss exactly what loan amount and what monthly installments are possible with the second borrower before signing a loan agreement. In the end, there must be enough money to cover the loan and other monthly expenses. You should therefore not calculate too tightly and always remember that a loan is usually repaid over many months and sometimes even years and that there must always be enough money to cope with unplanned expenses. On top of that, you need to be able to ensure that there is additional collateral in addition to the two applicants. In the case of large loans in particular, life risk insurance can certainly be recommended as protection.