Anyone who takes out an installment loan with a second person usually receives lower interest rates than an individual. Only a few are aware of this savings opportunity, even among married people the clear majority take out their loan on their own, as an evaluation by Check24 shows.
Two borrowers usually get their loan on better terms and lower interest rates than individuals. Nevertheless, even among married couples, 72 percent concluded their loan agreement with Check24 alone last year and thus unknowingly waived this savings option.
An example calculation that refers to the average of all installment loans taken out via Check24 in 2021 shows: Anyone who took out a loan of EUR 10,000 with a term of 84 months in 2021 paid an average effective annual interest rate of 3.99 percent. When borrowing for two, with the same term and loan amount, the average interest rate was only 3.03 percent. This corresponds to an interest cost saving of 335 euros or 24 percent. With a loan amount of 20,000 euros, the interest fell by 23 percent, and the interest costs by as much as 574 euros.
The reason for the better conditions when borrowing for two is to reduce the risk of default for the banks, since both borrowers are jointly and severally liable. In concrete terms, this means that if one of the two no longer pays his share of the repayment, the second borrower is liable for the full debt burden.
Another person increases the security for banks that the repayment will be made on time and makes better interest rates and higher loan amounts possible. Most loans are offered with credit-related interest rates. Applicants with lower credit ratings can also get a loan, but they have to pay much higher interest rates. On the other hand, if couples take out a loan together, their creditworthiness increases and interest rates fall.
A second applicant often improves the chances of getting a loan at all. For example, if one of the applicants has too little income or negative credit bureau information, a second person with a secure income and good credit rating can be the decisive trigger for a loan approval.
However, liability or even a guarantee for others should always be carefully considered – even in a partnership. Because once promised, it cannot be undone.
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