A loan with a guarantee – also called a guaranteed loan – is a special form of installment – or house loan. In the case of a guarantee loan, a third party guarantees you as a borrower towards your lender. So he makes the repayment of the loan if you yourself can no longer repay the loan – that is, you are unable to pay.

On other pages, you will find details of consumption – or house loans and further includes a loan calculator up to 65,000 USD and a form to request a home loan.

Background knowledge on the subject of credit with and without guarantors

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It is usually not so easy if you urgently need money in the cash register or need a consumer credit and home loan, but your credit rating is not the best.

A wide variety of living conditions can quickly lead to your own creditworthiness suffering and no longer being sufficient for a suitable loan: for example, sudden unemployment, extended illness and incapacity to work, or simply insufficient permanent income.

All of this is not easy for a loan application per se. But with a suitable guarantor by the side, it is still possible to get a loan from the bank. You should know this when it comes to credit with and without guarantors and you have these options.

Crucial question – what is a surety?

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Before you are interested in a loan with or without a guarantor, you should first know exactly what this means: A guarantor is liable for the liabilities of another person, for example for you as a borrower.

Specifically, this means that the guarantor will pay the installment of your loan if, as a borrower, you can no longer make it – for whatever reason. Therefore, a guarantor, similar to, for example, real estate or life insurance, is considered security for your bank.

In order to be able to use a guarantor, he must first conclude a guaranteed contract with your bank. A contract regulates when and to what extent your guarantor is liable for you in the event of a sudden loss of payment.

In contrast to normal loan agreements, in which you and the bank have equal rights, the loan agreement with the guarantor is a one-sided transaction. After all, your guarantor receives virtually no consideration for his signature. On the contrary: with his signature, he even takes a financial risk for you.

Therefore, loans with guarantors are always based on a certain relationship of trust – this should be clear to you and your guarantor right from the start.

When do you need a loan with a guarantor?

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Loans with guarantors ensure that even borrowers who do not currently have sufficient prerequisites from the bank’s perspective still get a loan. This can certainly apply to a number of consumers in everyday life:

Borrowers with a bad credit rating: If you have a bad credit rating as a borrower, banks usually struggle quickly with the granting of loans. Bad creditworthiness does not only mean that you have a negative entry in the KSV – the lack of solvency rates banks and credit intermediaries quite complex.

For example, it is sufficient if you have just started a new job and are in the trial period. If the job is fresh and can be terminated, this means an increased risk for banks in repaying loan installments on time. The same also applies to young professionals as well as to existing loan liabilities.

Here the bank usually prefers a guarantor in the loan agreement, which it can fall back on in an emergency and which pays the outstanding installments safely.

Borrowers without collateral: Even if you as a borrower do not have sufficient collateral such as real estate, a high net income or life insurance, banks are usually cautious. This applies in particular to long-term home loans or consumer loans with a large loan amount. In both cases, you can benefit from a loan with solvent guarantors in the background.

Self-employed, freelancers, students and pensioners: These consumer groups traditionally find it somewhat more difficult for banks to get a low-interest installment or home loan.

Loans for the self-employed and freelancers, for pensioners or students, are so difficult to obtain because they mostly have irregular and low incomes. Banks are particularly reluctant to grant loans to pensioners because the financial risk for the lender increases with age and the burden of credit is often too high.

The same applies to the self-employed, company founders and students – here, in particular, the risk of default is too high for banks and an additional loan guarantee is mandatory. Tip: If you belong to one of these target groups, this does not per se mean that banks reject your loan application without a guarantor.

A suitable guarantor generally increases your creditworthiness and increases your chances of getting a loan at low interest rates. With a good credit rating or smaller loan amounts, no guarantor is usually necessary.

On other pages, you will find details of consumption – or house loans and further includes a loan calculator up to 65,000 USD and a form to request a home loan.

How do you find a loan with the right guarantor?

How do you find a loan with the right guarantor?

If banks or intermediaries in Austria grant a loan, they first examine the possible risks of a credit default among consumers. In some cases – for example for higher consumer loans, financing for special purposes or for a home loan – credit institutions also require additional collateral with which they can secure the loan amount if necessary:

Consumer credit: With classic consumer or installment loans, the bank always checks your credit rating as a borrower. On the one hand, your income and expenses are queried.

Furthermore, your current score value is queried from the KSV. If this credit check shows a negative result, the loan application is usually rejected. To prevent such a case, you can use a loan with a guarantor or explore your current creditworthiness free of charge via self-assessment at KSV.

Car loan: In the case of a car loan, the bank is generally secured by means of a so-called security transfer. Here, the bank becomes the owner of the financed vehicle during the financing and receives this until additional repayment as additional security. Alternatively, the security of the vehicle can often be avoided at many banks.

Home loan: In the case of larger financing such as home or real estate loans, the mortgage collateral serves as a guarantee against default.

The priority entry in the land register allows the loan or sale of the property in the event of default. As an alternative or in addition, life insurance or disability insurance is often used as loan security.

Such insurance can also cover the remaining debt in the event of a mortgage, for example. With a guarantor or a second borrower, you have the opportunity to significantly improve your creditworthiness and interest rate.

On other pages you will find details of consumption – or house loans and further includes a loan calculator up to 65,000 USD and a form to request home loan.

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