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Borrowing in pairs - advantages and risks of borrowing from several people

Take out credit for two

Taking out a loan for two is a common practice for married couples. Most of the time it is about joint acquisitions, be it

  • the new car,
  • the financing of the new facility in the shared apartment or
  • an expensive vacation with the whole family

But even unmarried couples, even friends or relatives, can opt for a loan with two people. At the banks, it is no problem to fill out the loan application together with another person. On the contrary: it can even be advantageous to apply for a loan at the bank together with another person.

Take out credit for two to improve creditworthiness

For the bank, it does not matter whether the two applicants for the loan are married to each other, related or simply good friends. With the online loan application, the entry of another borrower is even prepared from the start. The forms are made in such a way that a second person can enter their data. This does not change the requirements for the loan application. Both applicants who want to take out a loan for two:

  • must have reached the age of majority,
  • a residence
  • have an account in Germany and
  • you must truthfully complete the application.

The bank checks the creditworthiness of the two applicants individually. This is exactly where it can pay off to apply for a loan for two people. For example, if one of the applicants has too little income or a negative credit bureau report , a second person with a secure income and good credit rating improves the loan approval decisively. Many loans are offered with interest based on creditworthiness, for example the loan without Schufa . This means that an applicant with a reduced credit rating can get the loan, but pays much higher interest. If, on the other hand, he can take out the loan with another person, the credit rating rises and interest rates fall.

Often a bank even advises two people to take out a loan if the creditworthiness is questionable. The bank is concerned with reducing the risk of default. The more uncertain the borrower's permanent solvency, the higher the risk that one day he will not be able to service the installments. Borrowing for two spreads the debt burden between two people. This increases the security for the bank in the same way as with a guarantee.

Not without risk - take out credit for two

However, the decision to borrow for two people should be carefully considered. If it is advantageous for the banks if two people take out a loan, the risks for the borrowers are not insignificant. People who take out a loan for two are jointly and severally liable. If one of the two can no longer raise his or her share of the repayment, the full debt burden falls to the second borrower. He then has to pay off the full amount of the debt, even though he has only benefited from part of the loan amount. This can lead to problems, especially with unmarried couples, especially when it comes to mortgage lending . But even with married couples, long-term loans can be risky if one of the partners becomes insolvent in the event of a separation or divorce . Delay in the installments leads to negative Schufa entries for both borrowers. The solution of a joint loan should be considered just as critically as the assumption of a guarantee for a loan.

Borrowing for two people - when it's worth it

Before deciding to take out a loan for two with someone, important considerations should be made. The people should have a very good relationship of trust with one another. This also includes absolute openness about your personal financial situation. If one of the persons is at risk of default, reserves should be created to service the installments. A free special payment is good for shortening the term, but does not offer any security for future payment defaults. The installments due will still be requested in accordance with the contract. Only people who use the loan amount jointly should take out a loan for two. For example, people can take out a loan for two to set up a business together, share a car, move to a shared apartment or travel together. Another option can be to pay out half of the loan amount to the second borrower.

Take out a guarantee or a loan for two

In both cases, a close relationship of trust is essential. In contrast to the guarantee, both of them benefit from taking out a loan for two. In the case of a guarantee, the surety bears the full risk of paying off the entire debt without having benefited from the loan. When borrowing for two people, on the other hand, a joint project is financed or both partners use their share for individual use. Dividing the installments by two also enables faster repayment.

Use interest rate advantages for borrowing with two people

The currently particularly favorable low interest rates allow more leeway for loans. However, we do not know how the interest rate market will develop in the future. If a person of trust is available with whom the applicant can take out a loan for two, both benefit from the low interest rate. Low interest rates allow the money to be repaid more quickly and, as a rule, also provide relief. Borrowing for two people can therefore be very beneficial on a case-by-case basis. However, it is important to consider all risks. If one of the borrowers becomes unemployed, for example, it can quickly happen that only one borrower has to pay off the full loan installment. In this case, it can be worthwhile to take out credit insurance that covers precisely such scenarios.

My name is Quang Lam and I work at Hegner Möller GmbH as Marketing Director. I am very interested in finance and sports. In my free time I like to go running and I also run a running blog. For the Best Credit blog I only write about topics that really interest me.

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