To guarantee someone for the car loan provides better conditions for the loan approval. Particularly in the case of difficult credit decisions, the guarantee provides the necessary creditworthiness even if it is not granted by the applicant alone. Accepting the guarantee of a friend or relative brings with it responsibility. For the guarantor, it represents a financial risk. The guarantor bears all the consequences for a poor repayment behavior without having any influence on it. Anyone who lets a guarantor enter into his credit agreement should be aware of this responsibility.
When car loan parents usually vouch for their children.
To vouch for the car loan is to stand for each other. Young adults in vocational training often face a mobility problem. Like every employee, they have to reach the workplace, but they only have the income of a trainee. Earlier, the purchase of a cheap first car was not a problem. The yards of the dealers were full of cars that had been getting old. Today it is not so easy anymore. Since 2000, the Consumer Protection Act is in force. The dealers have to give a guarantee. The previously popular student vehicles are therefore exported today.
Younger used vehicles, which can also be guaranteed, have a significantly higher value. So it happens more and more often that already the first vehicle must be purchased on credit. Without the parents vouching for the car loan, most of these loans could probably not be granted.
The guarantee gives creditors confidence in their investment.
A solvent guarantor provides good credit security for the lender. Many credit problems can therefore be solved by a guarantee. The added credibility of the lenders provides the basis for loans even outside vehicle financing.
Financing for the self-employed is often possible through a guarantee. Even small income earners often have problems getting a loan. They often find it difficult to prove a safe repayment ability. The lending rules are particularly harsh for people with a small income from the main job, who also have to work as self-employed sidelines. The income from the sideline is not recognized, even if it can be consistently proven over years. The only solution to getting a loan is then the guarantee.
Nobody should disappoint the confidence of the guarantor.
To vouch for the car loan is a risk. If the borrower does not pay, the guarantor will be liable for all costs related to the loan. Giving someone a guarantee therefore requires a great deal of trust. This trust should not be disappointed. It is more than just a friendship service to vouch for the car loan.