In difficult economic times, the prospect of a bank loan is becoming increasingly problematic. Especially when the desired loan is applied for without a co-applicant (guarantor), there is usually a very precise check. In particular, with loans without additional tenants, the aim is to minimize the risk for both sides.

The risk of sudden payment difficulties or even insolvency should be particularly assessed. It doesn’t always have to be your own fault, it can also be a consequence of a long illness, for example.

If the loan is to be used for a purchase without a co-applicant, it can be helpful to deposit it at the same time as security. Of course, real estate is still preferred. This makes it easy to secure even high credit requests and offers both the lender and the borrower appropriate protection. A car, on the other hand, can also serve as security, but in most cases it is only a vague security. With a new car, the loss in value is between 30 and 60 percent. With a used car, however, even much higher.

Alternative ways

Alternative ways

There are different ways of inserting appropriate credit safeguards for a loan without a co-applicant. First of all, as a borrower, you have to expect that interest rates will be higher. Because these always reflect the risk of default. However, monitoring is a common route, especially when no transfer of security (collateral) is possible. The borrower’s creditworthiness and creditworthiness are monitored at regular intervals. If a change can be identified, the bank can intervene immediately.

It is also standard to secure the loan with a life insurance policy (often with a falling sum insured). Above all, the bereaved are protected if the borrower dies prematurely. The sum insured falls year after year, parallel to the annual repayment benefits. In combination, this can also be expanded with occupational disability insurance. This means that the person concerned can continue to pay the current credit installments even after a serious accident or illness resulting from inability to work.

Combination insurance as a solution

Combination insurance as a solution

Residual credit insurance is also common and already includes some of the benefits listed above. In addition to death and accident, possible financial bottlenecks caused by unemployment or divorce can also be covered here.