Loans help to finance larger purchases in the long term. Through this, the parties also make clear commitments. Therefore, student loans are also subject to special requirements.
There are clear restrictions on student loans, partly because there is a legal requirement and partly because banks are very careful in this area. Minors are not allowed to get a loan in Germany. If they still need one, the parents must participate and act as co-borrowers. In this way, they vouch for their children and may also have to pay for their conditions and repayments. But students over the age of 18 usually have a hard time getting a loan.
The banks see this as too high a risk, since in most cases a student does not have a regular income and thus a secure repayment is not considered secured. Even a part-time job is usually not enough to convince the bank of its own creditworthiness, since the income from it is usually too low. As a result, even adult students only get a loan in a few cases. It becomes easier with a co-borrower. He or she no longer has to be a parent, however, if the student becomes insolvent, the parent must step in. Therefore, everyone involved should think very carefully about whether they have enough mutual trust to engage in this close relationship.
A potential guarantor must also meet several requirements. Among other things, he must have a regular income. The necessary amount of this depends on the amount of the required loan. In addition, he himself may not yet have high financial obligations due to his own loans. As a result, many parents already fall through the required grid.
Should parents vouch for their children?
This is a difficult question that each parent has to decide for themselves. It also comes down to the question of how to raise your own child. Many parents want their child to learn that they have to earn money themselves and get nothing for free. It is often pointed out that young people in particular only respect the value of money when they have worked hard. A loan would not fit into this view of education.
On the other hand, students also have to learn that they have responsibilities and that they have to follow certain rules. A loan can help with this. In addition, this does not rule out that the children or adolescents do not continue to have a part-time job. On the contrary, because only then will you be able to pay it back. In addition, they become aware that all their purchases and decisions have far-reaching consequences.
If you want to buy something, you have to work a long time to pay it off. So parents should decide on a case by case basis. In any case, it is important that the child or young person in the family is carefully introduced to the new responsibility and the subsequent obligations and is not left entirely with them. Nevertheless, it should be clear that it is not possible to hand over everything to your own parents. Even if the child is unable to pay an installment and the parents have to help out, they should insist that their son or daughter get the money back for a limited time. This is the only way to promote sensible use of money.
Disposition credit for pupils
An alternative that minors can use is the overdraft facility. This can easily be set up on the usual student account. The pupil is given the opportunity to build a minus level up to a certain limit. This gives them a significantly expanded financial scope and can better manage their own expenses. However, this possibility also poses considerable dangers. A prepayment loan is associated with extremely high interest rates, which can lead to permanent overindebtedness. In addition, the parents have no control over what their child does with the money and, above all, whether it is responsible with it. Young people in particular sometimes cannot really estimate how high interest rates can actually be.
Loans for adults
Students over the age of 18 shouldn’t have any problems getting a loan from a bank. In reality, students without proof of income only really get a loan in very few cases. However, there are several ways to avoid this practice. An alternative is the private loan. The person concerned borrows money from a private contact with friends or acquaintances. However, it should be noted that a personal relationship can be heavily burdened by such obligations. It is also important that the obligations and conditions are clearly written and set out in an official contract. This prevents sustainable conflicts. When a loan from a bank is brought forward, the student must provide a security. This can be a property, such as a property, but also an insurance or a guarantor. A guarantor is probably the most sensible alternative for a student, since he puts little at risk and parents are usually willing to offer themselves.