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Credit in marriage – what is important
Marriage means numerous economic as well as legal changes. But what is the situation like when it comes to unusual transactions, such as taking out a loan?
Most couples decide to share not only their lives, but also their accounts and finances when they get married. When it comes to larger investments such as a house, car or medical treatment costs, the question of a loan quickly arises. LEND offers loans and mortgages at favourable interest rates – but what are the advantages of taking out a joint contract, and is it essential in marriage?
Taking out a loan without a spouse – is that possible?
If you are married, many banks expect both spouses to sign the loan agreement. This gives the impression that it is absolutely necessary to take out a loan together. However, this is not true.
Married people can continue to enter into legal transactions independently, including taking out a loan. They can also continue to dispose of their income and assets independently. The consent of the spouses is only required in a few exceptional cases, such as guarantees or the sale of a home.
What are the arguments in favour of a joint loan?
If both spouses have a secure financial situation and solid income, this is an advantage when concluding a joint loan agreement.
On the one hand, this reduces the risk of loan default and, on the other, the additional income provides better protection against lenders. The lower the risk, the greater the chances of a favourable credit decision.
As part of the budget check, the monthly available budget (allowance) is determined. This determines the maximum loan amount. Consequently, two incomes usually result in a higher allowance, which in turn enables a larger loan amount to be taken out.
Finally, the lower probability of default also leads to a higher credit rating and therefore a better score. This in turn has a direct impact on the conditions of the loan and can be reflected in more favourable interest rates.
Who is liable for the loan in the marriage?
An important question when taking out a joint loan concerns liability in the event of payment arrears or even default.
If both spouses sign the loan agreement, they are jointly and severally liable for it. This also applies if the couple divorces during the term of the loan. However, if one spouse concludes the loan agreement alone, he or she is solely liable.
Unlimited joint liability only exists if one spouse makes purchases for the necessary and everyday maintenance of the family. This includes, for example, food, household appliances, clothing and health insurance costs. In this case, even if both spouses have not agreed to or even objected to these expenses.
What happens to joint loans after the divorce?
In the event of divorce, the loan is often transferred to one of the spouses. In these cases, this can be expensive as new fees are incurred. Now is a good time to compare the conditions of the current loan. Refinancing with a new provider could be more favourable and save the borrower money.
Conclusion: Joint borrowing is usually advantageous
There may be reasons why one of the spouses wants to take out a loan alone, for example for an expensive hobby that is not shared by both partners.
Regardless of such special cases, joint borrowing is a good idea. Married couples who both have a secure income can usually count on more favourable conditions and save money in the process.
What's more, you don't need a spouse to take advantage of the benefits of joint borrowing. Other people, such as relatives or close friends, can also be added as borrowers.
