Almost every car driver would like to have their own car so that they are more independent and no longer dependent on public transport. But not everyone can afford the purchase of a car. Cars are very expensive nowadays, especially new cars have a proud price.
Therefore, almost every car buyer is forced to take out a loan. However, if you do not have a regular income or a negative private credit entry, getting a loan is hard. Then only a car loan with guarantors comes into question. You can read more about this topic in the following.
Those who do not have sufficient credit will have a hard time getting credit for buying a car. The risk of loss is simply too big for the banks and therefore you are not actually lending to customers with questionable credit ratings or negative private credit entries. Now it would be an advantage if you can show a guarantor, then there is a chance of a car loan with guarantors.
As a rule, a car loan is a purpose-built loan, meaning you only get the money to finance the car. Furthermore, the borrower often receives very good conditions for a car loan, for example, the loan amounts and repayment periods are flexible. The interest rate is usually about six percent.
Before a loan is awarded, the bank checks whether it can be paid by the borrower at all. Here, above all, the credit rating is crucial. If there is no regular income, a negative private credit entry or no collateral, it will be difficult to lend.
At this point, a guarantor comes into play. The guarantor is a sort of substitute who clears the installments if the borrower is unable to do so. Nevertheless, not every person is suitable as a guarantor. The guarantor should have more money than the borrower and, at best, it is a person the bank already knows and to which the bank has confidence. If this is the case, the bank will approve the car loan without any problem.
Furthermore, the guarantor should be able to prove that he has a regular and high income and his private credit information should be impeccable. In addition, the guarantor must be aware of what the guarantee means to him. As soon as there are problems with the repayment of the loan, the guarantor has to step in and pay the running costs. The guarantor should consider himself as exactly what he gets involved in.