Trust loan – what is it?

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A trust loan is a loan with the participation of a trustee in addition to the lender and borrower. The trustee first receives the loan amount from the lender or trustor and then forwards it to the borrower. He also manages the loan amount for the borrower.

Trustee has no liability risks

Trustee has no liability risks

A trustee of a trust loan is usually a bank. In technical terms, there is often talk of a forwarded or ongoing loan. With this type of loan, the trustee takes on the role of the lender and receives a fee for this. However, he bears no liability risks for the credit default. The only risk he bears is the correct execution of the credit transaction. However, it is possible for the trustee to share a certain percentage of the credit risk against payment of a fee.

Social support through trust loans

Social support through trust loans

Trust loans are primarily used to pass on public funds that are intended to promote certain groups of people, economic sectors or regional areas. The motives for such funding are macroeconomic or socio-political, such as

  • SME support
  • family support
  • residential Development
  • Promotion of energy saving measures

In the case of trust loans, the bank generally receives the money from the federal government, from central state credit institutions or from insurance companies.

Trust loans can be granted as money loans or property loans. These are loans granted by the trustee from funds made available by third parties (from the trustor). This is only possible if the loan and the payment of the principal and interest payments are properly managed by the trustee.

Advantages of trustee loans

Advantages of trustee loans

Both borrowers, lenders and trustees can benefit from fiduciary loans.

It is an advantage for the borrower to benefit from the conditions, ie the interest below the market interest rate of ordinary banks.

The advantage for the lender is that he does not have any administrative tasks with the lending.

The bank has an advantage through this form of credit, since it does not use its own financial resources and does not have to bear the risk of default. However, it still receives part of the fees and interest as remuneration.