What happens to the loan after a separation?

Many couples take out a loan together, for example to finance a car or to buy new furniture. But what happens to this loan if there is a separation or divorce? That depends on who signed the loan agreement. If the signature of only one spouse is under the contract, only that spouse is obliged to repay the borrowed money. Even if a gain has been made in the marriage, the other spouse is exempt from repaying the loan after the separation.

If it is debts from an overdraft facility for the joint account, both spouses must ensure that the debts are settled even after a separation.

If the loan agreement was signed together

If the loan agreement was signed together

If both spouses have signed the contract, both are liable for the debts. One then speaks of joint and several liability. This means that the installment loan must still be used by at least one of the borrowers after the divorce. If the ex-partner stops paying, the bank can claim the debts from you.

This can only be changed if you have the loan rewritten. You can then have the credit agreement changed in consultation with the bank so that – even after the separation – only one spouse is obliged to repay the loan.

If you have taken out a joint loan for mortgage lending and both partners are owners in the land register, both will also be liable for the loan taken out after the separation – even if only one has signed the contract. However, with the consent of the bank, you can agree to release the debtor if you separate: one borrower takes over the other’s ownership. The prerequisite for the bank is that the new sole owner can continue to finance the loan after the divorce.

If a guarantee has been taken out

If a guarantee has been taken out

In the case of a loan with a guarantor, the guarantor is liable for the ex-partner’s debt even after a separation or divorce. If he no longer meets his payment obligation, the guarantor must continue to pay off the loan – regardless of whether this still happens in the marriage or after the separation. Here, too, it can only be agreed through a release from guilty liability that the guarantee is terminated in the event of a separation and that the guarantor can no longer be held liable for the payment obligations.

Categories: Loans

Loan Term – How To Determine The Term For Your Loan!

When deciding on a loan, the loan term is one of the most important factors you need to consider. Many do not worry about it and later have problems with the repayment. The following article deals with the question of which loan term is optimal for you and how you can determine it.

 

Why is determining the loan term so important?

loan term

By determining the loan term, you decide how much money you will spend on the loan per month over the next few years. If the term is too short, the monthly installments rise sharply. This puts a heavy strain on your budget and may lead to severe restrictions in your lifestyle. However, the loan should not run too long either, as this makes the loan more expensive. Building finance is an exception, since the loan amount is usually relatively high and it is not uncommon to conclude it over a term of 30 years. When taking out the loan, you always have to think long-term. The loan term is often 5 years or more. If you calculate too little, your household budget may experience low tide in the next few years.

 

Why do longer terms incur higher costs?

loan terms incur higher costs?

When taking out a loan, you pay interest for the entire term of the loan. If the loan runs for five years, the interest is less than for a ten-year term. Overall, the bank gets more money from you.

Another reason is the interest rate. A longer-term loan is usually higher. With a ten-year loan, the bank takes a higher risk. During this long period of time, the risk of a credit default due to death or unemployment increases. If, on the other hand, the loan only runs for five years, the risk is there, but less. The higher interest rate is intended to limit the financial damage.

“The longer the loan term, the more expensive the loan becomes.”

 

How to determine the appropriate term for loans

How to determine the appropriate term for loans

You can determine the optimal loan term using a household book. You need to know how much money you are spending each month and whether you have any leeway for a loan at all. If your account is permanently overdrawn and falls into the overdraft facility, you should make this list particularly conscientious. Incidentally, many credit institutions also require a self-assessment of their expenses.

  • List all expenses in your household
  • Make a list of all income (work, extra income, rental income, pensions)
  • Find the difference between the two sums. Leave a larger buffer for unforeseen expenses
  • Use a loan calculator to test different loan terms.´
  • Increase or decrease the loan term until you determine an appropriate monthly repayment

When it comes to the list of income, think of larger expenses for which you have to put money over the course of the year. This can be a new vehicle or the next family vacation.

You cannot extend the loan term as you like. Real estate loans often run for ten or a maximum of 15 years. Consumer loans generally have a maximum term of seven or eight years. If you notice that you have financial problems despite a long term, you have to reduce the loan amount. Under no circumstances should the monthly rate be too high. It is better to calculate a little lower. Unfortunately, unforeseen incidents happen again and again and then you may run into financial difficulties.

 

Can you change the loan term at a later date?

loan term at a later date?

If you want to extend the term of a loan, you have two options. You can cancel the loan and conclude a new contract with a longer term. If you are only interested in extending the term of a loan, this procedure is not recommended. Most loans require you to pay a prepayment penalty if you cancel early. This amount is due because the banks expect the money for a long time. Since they invest the money themselves, the bank has an interest loss if it is repaid early. The bank passes this on to its customers. A new contract is only worthwhile if you also receive lower interest, which your previous bank does not want to pay.

In most cases, debt rescheduling is better. In this case, no prepayment penalty is payable if you stay with your old bank. Another advantage is that it usually works without major formalities. Since the bank already values ​​you as a good customer, it often does not provide proof of earnings.

If the interest rate has changed since the contract was concluded, it may be lower or higher. You should take this into account when rescheduling.

Categories: Loans

What are the reasons for rejecting a loan application? And what about it?

Filling in a non-binding online loan application is the first step to processing a loan and eventually raising funds. However, the demand from the client must not always be dealt with positively, in which case the request will be rejected, which usually does not allow any “appeal”. In what cases can your application be rejected or you will not even receive any comments?

Why did I decline my loan application?

Why did I decline my loan application?

Of course, in a situation where you are applying for a financial injection, rejecting the application is frustrating, but it can be partially prevented. Therefore, we will discuss how to do this below. We will show you how companies proceed in evaluating applications, when the application is automatically rejected and when a response can actually be expected.

When is a loan application rejected immediately?

When is a loan application rejected immediately?

There are not many of these cases, but with reasonable lenders, this group includes insolvent candidates. Under no circumstances will the bank or non-bank providers lend money to such applicants. Of course, there are some exceptions, but we would definitely not recommend it to anyone (usurers, private individuals, etc.). If you are in insolvency for a loan of your own interest do not even seek. However, do not even try to hide this fact in the loan application – the provider will find out anyway in the evaluation of the application.

When will I receive a response to my request?

When will I receive a response to my request?

This is very individual, it is a bit different for each provider. Some companies are connected to various online systems and can assess candidates in real time at any time of the day or night. On the other hand, some companies evaluate applications partly by human force – and therefore only during working hours. It is therefore clear that while the first company will receive a statement within 5 minutes. For the latter, it may take several days (in the case of a Friday night application).

Why didn’t anyone contact me?

How is it possible? If you have applied for a loan from a bank, you should always receive a statement of confirmation or refusal. It does not necessarily give a reason, but you will receive a notification each time. However, this is not the case with non-banking companies. Therefore, a non-banking company does not need to notify the candidate.

Why was my loan application rejected?

Why was my loan application rejected?

Again, there may be a number of reasons, but the main reason is that you already have a debt with another company , or you have insufficient creditworthiness . In such a case, the provider protects both himself and you – the consequences of non-repayment of the loan can cause serious difficulties for the client – and of course the lender is interested in having his loan repaid properly. An important factor is also the history of the client and his payment discipline, which can be safely read in various registers of debtors. All of the above reflects the candidate’s overall creditworthiness – which is crucial.

Categories: Loans