Every time you take out a loan, a credit assessment is made on you. It is the basis for the terms – interest rates, repayments, repayment period, etc. – that apply to the loan. Since the terms are based on your particular financial circumstances, it is not obvious that the loan can be overwritten by someone else. But there are different ways to get around this. Here are 3 common examples of how this can happen.
The lender gives his approval
If you stand as a sole borrower and want to overwrite your debt on someone else, you need approval from your lender. If they consider that the new borrower has the capacity to pay according to prevailing conditions, it should theoretically not be a problem to overwrite the loan. However, many banks say no to this and only accept you personally as a borrower.
It is far more common for the loan to change the creditor (creditor) than the debtor (borrower). Private loans – the type of loan that Gregor Samsa conveys – usually come with a current debt. This means that the lender has the right to transfer your debt to someone else should you fail to manage your payments. The bank thus sells the debt to another party.
Someone else borrows to settle your loan
Since a private loan can be used for anything, a third party can apply for a brand new loan and use the money to settle your debt.
Your co-borrower takes over the loan
A co-borrower is a person who stands with you on the loan and acts as a guarantee that you will be able to repay your debt. The borrower has a joint and several liability towards the lender, which means that he or she is prepared to go in and pay your loan if you are unable to do so yourself. Many times, the terms of your loan actually depend on the co-borrower having sufficient finances. That this would be approved for standing as a sole borrower is therefore most likely.
Having trouble paying off your loans? Check with your bank what rules apply to them. If there is no possibility to overwrite your loans with someone else, you can instead try to collect them into one and the same, in order to get better interest rates and terms. Read more about how to proceed here.