Freedom to repay loans
Loans for the unemployed without a co-applicant are difficult to obtain, which is related to the fact that the unemployed have no regular income due to their situation, which is why, conversely, there is no credit rating. If the bank cannot unequivocally assign the prospective borrower a credit rating, the borrower is rejected on a blanket basis due to the risk being too high.
The liability of the co-applicant behaves similarly to that of a conventional guarantor, that is, in solidarity and representing the actual borrower. The difference, however, is that a co-applicant also receives a share of the loan amount, while the guarantor only pays for the debts incurred in an emergency. Co-applicants are mainly found with spouses or companies, as they then want to use the loan amount together.
Loans for unemployed people without a co-applicant are therefore only possible if the co-applicant is replaced by a guarantor, as this can compensate for the borrower’s lack of creditworthiness. However, if the borrower cannot provide a person to guarantee, the bank will tend to refuse even with micro and small loans, since in this case repayment cannot be guaranteed. The social benefits available in Germany simply do not provide any freedom to repay loans, which is why it is difficult to pay the installments without a regular income.
Alternatives without a co-applicant
There are also lenders away from banks where loans can be taken out for the unemployed without a co-applicant. Private lenders are primarily suitable for micro and small loans, since the respective loan amount must of course be provided from the lender’s savings. For loans for unemployed people without a co-applicant, the parents or grandparents mainly act as lenders, as they tend to ignore the poor creditworthiness and tend to grant a loan based on the relationship between them.
The possible loan amount and thus indirectly also the credit line always depend on the ratio and the financial possibilities of the lender. If the parents earn a lot, a slightly higher loan may be possible, although unemployed people should always keep the fact of over-indebtedness in mind. Over-indebtedness occurs when bills and debts can no longer be paid on time. This in turn creates reminder costs, which then indirectly cause new debts.
From this point on, the borrower is in a debt spiral, where new debts are triggered by outstanding debts. Such a circumstance is less common with a private lender from the family, but the amount, including any interest, should of course be paid. Often, however, parents and grandparents are far more forgiving than banks, which is why a loss of rates is more likely to be compensated for.