Guarantees and joint liability

Make sure you know which rights and obligations the different loan parties have before signing a loan agreement.

Joint loan

If you take out a loan together with your spouse, for example, you are jointly and severally liable for it. This means that you both are responsible for the debt until it has been repaid in full. Housing loans, for example, are typically loans for which the parties are jointly and severally liable.

The creditor may require you to pay the entire monthly repayment if the other party does not pay their share. You have the right to recover from the other party the amount you have paid on their behalf. This is called the right of recourse.

You can contact your credit provider if you wish to discuss your situation.

Guarantor

A guarantee is one way to secure a loan. The guarantor will assume responsibility for the debt if the debtor is unable to pay it himself or herself. There can be one or several guarantors.

The most common form of guarantee is a guarantee as for one’s own debt, which means that the guarantor is personally liable for the debt as for his or her own debt. If the debtor does not repay the debt by the due date, the creditor has the right to require the guarantor to pay it. The creditor does not have to wait for the debtor to be declared insolvent.

If you are asked to be a guarantor, read the guarantee agreement carefully. Make sure you will be able to pay the debt if necessary.

Security provider

A security provider has pledged their property as security for another person’s loan. The creditor has the right to take possession of the security to repay an outstanding debt.