Reasons for loans
The reason for a loan can have a variety of causes. First of all, there may be outstanding invoices that have to be paid. Loans are often applied for if the unpleasant additional payment of the additional costs. Another reason to take out a loan is to fulfill smaller requests. For example, these desires include a vacation or the purchase of a car. Larger investments such as the purchase of a property can also be realized with the help of a loan. These can also be requested by two people.
Reasons for a Two Person Loan
The reasons for a 2 person loan can be a better credit rating. Since the credit institutions only consider the costs of running a household in a shared household, the creditworthiness increases and thus the chance that the loan application will also be approved.
It is therefore obvious that couples who want to buy property together should apply for a joint loan. However, married couples in particular are often of the opinion that they can only apply for a loan in pairs. However, this is a myth. It is therefore advisable to be careful with banks that insist on the signature of both partners.
For the creditors, of course, there is an advantage because they have two contacts. In the event that the debtors fail to pay back, they can use two people to make the repayment due. This is also advantageous for the lender in the event of a divorce. Nevertheless, a loan for two people can only be applied for by one person.
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Benefits of a two person loan
As already mentioned, the credit rating increases when couples who share a household apply for a loan together. Since the lenders check them and do not assign their interest on loans in a lump sum, but make them dependent on their creditworthiness, it can make sense to have a loan written on two people. In principle, the credit check for individual people is worse than if a loan application is for two people.
The consequence of a 2-person loan is therefore more favorable terms and a higher probability of getting this application. Furthermore, the amount that can be granted in a loan increases with the number of people, i.e. also with double income. This is because the entire household income is included in the credit check.
Disadvantages of a 2 person loan
With a joint loan application, however, it should also be noted that in the event of a negative credit bureau, the credit check can also be more negative. The credit rating deteriorates if one of the partners has a negative credit bureau entry. This would of course do the opposite of the desired result. For this reason, it can make sense in such a case if the partner with a positive credit bureau makes the loan application alone.
When making a joint loan application, it should also be borne in mind that in the case of a two-person loan, both partners are jointly and severally liable. If a loan is taken out together, both applicants can be held liable. In the case of a loan application that is made alone, the other spouse cannot be used to repay the debt.
So what do the advantages and disadvantages mean for a two-person loan application?
In order to be able to make a decision for or against a joint loan, the personal situation of the applicant must be taken into account. This means that your own credit rating should be included in this decision. Nevertheless, in most cases a joint loan application leads to more favorable interest rates. This is due to the fact that there is double household income and only costs for housekeeping.
In addition to a joint loan, a partner credit card can also be applied for. Especially for spouses who are in a profit sharing community, a credit card that is issued for 2 people makes sense. However, the partners should be aware that both have access to this card. So there should be enough trust that nobody uses the credit card. However, since spouses usually have shared accounts anyway, this should not be a problem when choosing a credit card for 2 people.
Find cheap loans through loan comparison
The various factors influencing lending are assessed differently from bank to bank, even for two-person loans. If the applicants want to apply for a large loan amount, a loan comparison is worthwhile.
But even with small loan amounts, a comparison of the loans can be worthwhile. This applies to loans that are tailored to one person as well as partner loans. By comparing the loan calculator, applicants are listed with all the advantages and disadvantages of the credit institutions on the market. The loan applicants can thus get a good overview and find the cheapest loan on the best terms.
As already mentioned, a joint loan contributes to this, since both incomes are included in the credit check. It is therefore important not to accept the first best lender as a creditor, but to compare several banks and private credit institutions with each other. This is the only way to find particularly cheap loans with excellent options and to fully utilize the financing options.