What is a material credit security?
A loan means borrowing money from the bank, which generally requires protection. Hedges can exist in the form of valuables and tangible objects, the claims usually being secured in the form of a loan. If problems occur during the repayment and redemption phases, the lender can resort to his objective credit collateral. This means that they can now initiate foreclosure or sale in order to get the money owed.
The inclusion of a mortgage
For example, the mortgage of a property or a plot of land can be described as factual credit protection. It represents one of the most common forms of material credit protection. In addition to the mortgage in this country rather the terms mortgage and land register are familiar, which in this sense has the same backgrounds. As a rule, loans are taken out for real estate, at the same time they serve as security for the bank. However, this does not always have to be the way, because real estate or other valuables can also be used for other purposes. For example, if the borrower wants to buy a vehicle and the bank leaves the vehicle registration to the last installment. Then the vehicle represents the objective collateral for the bank.
When do you claim the objective credit protection?
In general, objective loan collateral is not required for every loan. For small loans, the bank often passes the monthly income through the borrower’s existing employment relationship. For the bank a clean credit bureau without negative entries is important, a regular income and a reliable account management. Yes, many banks also look at how to handle the borrower’s money and thus decide whether the borrower can handle loan rates responsibly. Factual backups are therefore usually only required for higher credit sums. Because the higher the loan amount, the bigger the loss of the bank. In a real estate purchase quickly 300,000 – 800,000 euros payable, which would represent a significant loss in any case.
Are there other credit backups?
In addition to factual, personal credit security may also be considered. Here, a third person acts as a guarantor if the borrower can no longer meet his obligations. Of course, the guarantor must also be suitable for this and may possibly serve with a matter-of-fact credit guarantee. For example, if he already owns a house. Furthermore, the real collateral should be enumerated. These include assignments of claims, assignments of security such as vehicles or machines, pledges of savings or securities and other assets.
A factual loan guarantee is also a security for the borrower. After all, this can therefore ensure that it does not come out of the contract completely indebted. If, for example, a € 10,000 loan is taken out and the bank has proof of income and credit bureau information sufficient, then the borrower can in the worst case remain on this debt. Apart from the loss of the bank, the borrower can also be penalized.