It can often happen that you are able to take out a loan. This can actually happen to anyone. Because if you need a certain amount of money quickly, for example for a new car or a new refrigerator, then it is good if you can borrow the required amount from a bank or a credit institution. It is even better if you can provide collateral for the loaned amount.
What collateral loans are there?
Banks and credit institutions are more likely to agree to a quick loan if you can be given certain guarantees and the creditworthiness is given. For example, when buying a new car, this new car can be given as security for the loan. If you then encounter payment difficulties and can no longer pay off the loan, the bank then has the opportunity to use this vehicle for the debts.
Banks and credit institutions have the option from the very beginning of granting loans with collateral to get the money they have lent back. Of course, many things are suitable as security for a loan. In this way, even with a very high loan amount, you can register a property right over property. This is often the case with home finance, which is always collateral loans.
But banks also recognize loans where the borrower signs a so-called assignment of claims in the event that he cannot repay the loan. These are mostly amounts from life or other insurance. The assignment of wages or salaries is usually part of the loan agreement as standard.
Loan with guarantee
Another case of collateral loans is when the bank or credit institution demands a guarantor. Then the borrower is a risk factor for the creditor, so that he wants to secure his claim extra. A surety can be anyone who is of legal age and appears to the bank to be creditworthy. A guarantee then comes into force when the borrower can no longer pay his monthly installments for the loan taken out.
The guarantor is then obliged to be liable to the lender with all his assets for the borrower. Therefore, a guarantee is a very delicate thing that you have to think carefully about as a guarantor. How do you feel about the borrower, is he only a distant acquaintance or does he belong to the closer family, such as a brother, daughter or parents. Therefore, if you are asked whether you take on a surety, you should carefully weigh the risk beforehand, because if the borrower does not repay the debt to the creditor, the creditor has the right to take legal action against the guarantor and to enforce it.