A negative private credit information makes it difficult to borrow, since only a few financial institutions are willing after a case-by-case examination to pay a loan applicant to a claimant with a negative entry. Most credit banks continue to rate completed registrations as negative, even though private credit classifies them as neutral.
However, it is possible to take out a loan with a guarantor despite the applicant’s negative private credit. However, credit offers do not make all banks, so applicants combine their credit comparison with a thorough search for the right financial institution. Of course, the private credit information provided by the loan bureau must not contain a negative entry in this case.
What does the guarantee mean?
In a loan with a guarantor despite negative private credit two persons are liable for the loan repayment to the bank. The loan guarantor enters the repayment obligation on the default guarantee provided by the legislator as soon as an attempted attachment to the borrower is unsuccessful. In practice, almost every financial institution in the case of a loan with a guarantor demands the agreement of a direct guarantor despite the borrower’s negative credit. In this case, she may already resort to the guarantor if the actual borrower owes the installments and does not have to try compulsory repatriation.
As soon as a guarantor enters the repayment obligation, he acquires a repayment claim against the actual borrower. However, this is often not feasible in practice, as the bank customer has too little money in the long term or registers the personal bankruptcy.
Credit applicants sometimes respond surprisingly when a financial institution refuses to lend to a guarantor with bad private credit and instead proposes a joint loan application. In the opinion of many consumers, the guarantee represents a higher level of security than a credit application. In fact, however, the legislature makes high demands on a loan with a guarantor despite negative private credit. These increase if the credit bureau is emotionally connected with the claimant. While courts often invalidate guaranties as a result of an economic overstrain of an inexperienced guarantor perceivable by the bank, joint application for a loan is not subject to such strict requirements.
Whether the financial institution accepts a freelancer or a self-employed person as a credit guarantor is governed by its credit guidelines and does not necessarily reflect the criteria for granting credit. Finally, entrepreneurs are generally considered to be economically experienced, so they fulfill one of the basic requirements for an effective guarantee.
Check the loan agreement carefully
The interest rate of a loan with a guarantor should be significantly lower than for a Swiss loan without private credit, despite the negative private credit of the actual borrower, since the bank has the additional security by the possible use of the guarantor. The cheapest interest rate is determined by borrowers in a credit comparison, whereby they try different durations and amounts enter.
The credit comparison complicates the practice of many banks, the terms of the loan with a guarantor despite negative private credit not openly indicate, but a prospective customer only to a specific demand. In this case, there is a non-binding demand for the average interest premium for the loan application with a guarantor. Such is understandable due to the additional effort required for the examination and processing of the guarantee commitment.
However, in the case of a loan with a guarantor despite negative borrowing information from the borrower, the most favorable effective annual interest rate is not the only criterion for a concrete bank loan offer. In his loan comparison, the prospect also looks for flexible repayment modalities. The right to a one-off installment per annum or every two years, or the option to change the repayment plan on request, prevents the lender from prompting the guarantor to settle the loan installments even in the event of temporary payment difficulties. Experience reports of previous credit customers, who describe a generous handling of a bank with appropriate requests, are mostly credible. However, they do not replace a clear clause in the credit agreement, as financial institutions can at any time unilaterally change their goodwill behavior. The eligibility for additional repayments without calculation of a prepayment penalty rounds off the flexible repayment options, even if they are rarely used by borrowers with negative private credit.
In the case of a bank loan with a guarantor, despite negative credit from the creditor, a largely flexible repayment option justifies a reasonable additional interest expense compared to the cheapest, but completely inflexible loan offer.
The organized personal loan with guarantors in bad private credit
As an alternative to a bank loan, consumers on lending platforms between individuals can apply for an organized private loan with a guarantor despite negative private credit. Placing a loan guarantee on the appropriate platforms is one of the options that loan applicants can choose to increase their chances of getting a successful request.
The loan guarantee makes it easier to take out a private loan than without a guarantor in the case of an exceptionally weak private credit, which includes, above all, a hard negative entry and several soft negative notices. On the other hand, if the negative private credit information consists of a single soft negative characteristic, it is not absolutely necessary to provide a guarantor on the personal loan platforms, especially since private lenders place less demand on the creditworthiness of their customers than the traditional commercial banks. On the other hand, when applying for a private loan, it is important to present the projects to be financed and the overall financial situation as comprehensively and openly as possible.