The credit business is one of the most important branches of business for banks and credit institutions. The company generates its sales and profits by granting loans. Losses can also result from loan defaults. If a lender finds a lending transaction too unsafe, he can request collateral from a borrower. A rough distinction is made between factual and personal loan collateral.
Private loans are secured with the wages or salary
If a credit contract is concluded in private customer business, the salary or wages count as collateral for the loan applied for. In addition, residual debt agreements can be made in the form of credit insurance. In the event of unemployment, in the event of illness or death, the creditor receives the remaining debt from the insurance.
Capital-forming life insurance policies to repay the loan amount, life insurance policies to cover the risk of death or comprehensive insurance for vehicle financing are also often required. Movable property is rarely accepted as collateral because it would have to be deposited with the bank. In the case of married people, one spouse is liable for the debts of the other spouse with a so-called spouse guarantee.
The guarantee is a personal loan security
If the borrower’s creditworthiness is insufficient despite wages and salaries, a surety can be ordered. With the conclusion of a guarantee contract, which is regulated in the Civil Code, the guarantor undertakes to assume the debtor’s liabilities towards the creditor. A guarantee contract must always be concluded in writing. A distinction is made in these forms of collateral between a simple and a direct guarantee.
If a simple guarantee has been agreed, the guarantor will only be consulted if all attempts to collect the outstanding debt have been unsuccessful. In the case of a joint and several guarantee, the creditor can immediately demand that the debt be paid. A guarantee ends when the loan debt is repaid, a time limit has been agreed or the guarantor is called upon. If the guarantor dies, the guarantee does not expire.
Other collateral is movable and immovable property
The land charge, the transfer by way of security, the lien and the mortgage are real or real assets. However, the mortgage is rarely used to secure a loan. If a loan is taken out, a land charge is entered on the property or real estate of the borrower. Security assignments are made for motor vehicles. The motor vehicle letter remains in the bank’s possession until the loan has been repaid in full.