The car loan with guarantors offers the lender a high level of security when granting loans. A guarantor can make a car loan cheaper, especially when it comes to online credit-related offers. In cases where the applicant is faced with a lack of creditworthiness, a guarantee can help to improve creditworthiness. In the following article, the advantages and disadvantages of a guarantee for a vehicle loan are discussed in more detail.
Guaranteeing a car loan is a matter of trust.
Who should guarantee a car loan should really be able to trust the borrower. A guarantee has legal consequences, at the latest when there are problems with loan repayment. In the worst case, the burden is liable for the entire loan amount and the additional costs, but also interest. In principle, therefore, the warning only applies to a guarantee if there is an exceptional basis of trust. In this case, a loan guarantee can also bring great benefits for the borrower.
The car loan with a guarantor significantly increases the creditworthiness of the borrower. The loan can then be made significantly cheaper. Interest rates are always associated with the risk of the investment. If the risk can be assessed as low, then the interest rates are low; if the risk is increased, the required interest rate also increases. With a car loan, the guarantor brings together two risk-reducing factors. The vehicle itself represents a not insignificant material asset.
The lender could fall back on it in an emergency. The second risk reducing factor is the person who is a solvent guarantor. If the borrower does not pay, he can be held liable for the loan. A guarantor therefore creates additional trust in the repayment security and thus often ensures more favorable loan conditions.
In the case of creditworthiness problems, the loan is often only possible through guarantors.
Self-employed tradesmen particularly often have problems proving their creditworthiness. Even with a good order situation, they are therefore only granted a car loan with a guarantor. Only the guarantor, according to the specifications of many banks, ensures the repayment of a loan for entrepreneurs.
An alternative to car loan with guarantors is the Swiss loan for self-employed, offered as a foreign loan by credit intermediaries. Of course, these banks also expect to ensure repayment ability. But the income from self-employment can be assessed differently and therefore lead more easily to lending.
Another alternative to handle a car loan with guarantors is the “gray” credit market. This means loans from private investors. A vehicle that can be used as security for lending increases the chances on the private credit market considerably. Anyone who has no guarantor or does not want to have anyone guarantee their car loan has alternatives.