Sometimes there are situations where desires do not want to wait any longer, open invoices have to be settled or an annoying repair is urgently needed. Especially larger purchases often can not be completely paid with the savings. If the account balance just does not fit the wishes or financial obligations, a consumer credit helps to become liquid again.
What is a consumer loan?
This is a financial bottleneck easy and convenient to bridge. Consumer credit, often called installment credit, is the most common type of credit when it comes to financing consumer spending. It is one of the standard products of banks and can often be completed and compared online.
By applying for and approving the loan, a loan agreement is concluded between the borrower and the lender. The money borrowed on the way will be repaid to the bank in monthly installments.
The duration or rate can be chosen flexibly, so that it is sustainable in the long run. Overly speaking, terms of between 12 and 84 months can be chosen. In exceptional cases longer periods are still possible.
In most cases, the loan with disbursement is at leisure. The amount of the potential consumer credit depends on the income and personal creditworthiness.
What requirements must be met for taking out a loan?
Who wants to borrow money from a bank, must meet some conditions. Before a consumer credit is approved, an examination of the prospective customer and his financial situation takes place. Consumer loans are available to private individuals. Employees and the self-employed can apply, whereby self-employed persons find it more difficult to obtain money from some banks. Their revenues tend to fluctuate more and there is no guarantee of the amount of revenue for the future. As a result, banks rate credit default risk higher than salaried employees.
The two most important conditions for lending are a demonstrable regular income and a positive Private credit statement. If one of the two points can not be met, many banks are unwilling to make a loan. However, there are also solutions for these cases, which will be discussed in detail later.
- Private credit
The Private credit is the most important economic information in Germany and has millions of records. It will provide data on existing loans, accounts, credit cards, on-going obligations such as leases, mobile phone contracts or installment purchases in the retail sector. The Private credit also knows whether it came to loan defaults or dunning. On the basis of this large amount of information, the creditworthiness is evaluated in a score. Everyone has a claim to see the data collected by Private credit about his own person. A negative characteristic in the Private credit results in the rejection of the loan application.
- Regular income
The second essential criterion for the award of a consumer credit is the regular income. This must be proven in the form of payroll for employees or a loss and profit account for self-employed. Often, the account statements are required. On the basis, it is checked whether the credit installment can be paid over the term. Anyone who has a fixed-term employment contract or is one of the marginally employed must face higher hurdles than a permanent employee.
In any case, possible collateral such as existing life insurance or real estate ownership will have a positive effect on a loan approval. Likewise, a second borrower, for example the spouse, is acting positively.
Sample bill for a loan
In most cases, the loan rate is given based on the credit rating. If the bank sees a lower risk in the customer, the interest rate will be better. Conversely, special risks are “punished” with a higher interest rate. Some banks offer a single interest rate regardless of credit quality.
Before taking a installment loan, consumers should compare the interest rates. The conditions can be very different and a comparison saves money. In addition, there are now and then special promotions with very favorable conditions.
Example calculation for a consumer loan with the following assumptions:
A loan of 5,000 euros is to be taken up and repaid over 36 months. The annual percentage rate is 3.99 percent. The monthly rate is under the conditions at 147.44 euros. A total of € 5,307.60 will be paid back over the 36 months for the borrowed amount.
Which special forms are there?
If the money is not to be paid for free, but is needed for a specific purchase such as a car purchase, there are special credit offers on the market. The car loan is a specially tailored to the purchase of a new or used car loan. Most car dealers offer with the purchase of such a loan.
In general, the interest rate on car loan is cheaper than the normal consumer credit. However, the car is deposited as security. In the event of a loan default, the lender can sell the car and thus offset his claim.
What potential pitfalls should be considered?
Consumer rights have been strengthened in recent years. Thus, all costs must be included in the reported effect rate and an immediate repayment of the loan is possible at any time for a small fee. However, consumers should pay attention to some important issues before concluding. This can save you money and trouble.
The biggest difference between consumer credit providers is interest. Between cheap and expensive offers are often more than five percentage points difference. A thorough comparison of interest saves a lot of money over the term. In addition to the interest rate, processing fees can increase the cost of borrowing. These are no longer allowed and yet they are still required by individual providers.
When soliciting offers, it is essential to ensure that the request for credit is not reported to Private credit. A concrete loan request is saved and lowers the credit rating. For several requests in a short time, this has a negative effect. There is the feature “request credit conditions”, which does not affect the Private credit score in the least. Therefore, it should be insisted in the comparison, that only the request of conditions goes to the Private credit. Then several requests are no problem.
What to do if your credit rating is poor?
Getting a loan with a negative entry or a very low score on Private credit becomes difficult. Entries such as reminder, enforcement or bankruptcy proceedings in the Private credit make lending very unlikely. Then usually the addition of a second borrower does not help much.
Negative entries are stored for up to six years before being deleted. Thus, a remindered mobile phone bill can be long paid, but still hinder the lending. German banks are required by law to check creditworthiness before granting credit.
A way out of the dilemma may be to apply for a Private creditfreien loan or Swiss loan. There are numerous offers on the market, but they should be checked carefully, because not all are reputable and recommended. In particular, you should keep your hands off of intermediaries who charge a fee in advance for filing applications.
As a rule, non-scholarly installment loans are offered through banks from Switzerland or Liechtenstein. An entry of the credit in the Private credit does not take place, nor is it checked in the award. A regular income must be demonstrated in any case.
The interest rate on a debt-free loan is higher than the market average as it compensates for the increased risk associated with the award. It is very difficult to obtain larger amounts of debt as a loan. As a rule, up to 5,000 euros can be displayed along the way.
If you are in a particularly tense financial situation or have to contend with contaminated sites in the Private credit, you will find an alternative here.
Current interest rate environment
The permanent interest rate lowers savers. Those who want to borrow money benefit from historically low interest rates on consumer credit. As things stand, the interest rate environment will remain at the low level. Rosy times for debtors, especially if they have a very good credit rating. The best offers for an amount of 5,000 to 20,000 euros and a term of 36 to 60 months are currently at an effective rate below three percent. These top conditions apply with best credit rating, otherwise there are surcharges of up to five percent.
Those who would rather resort to an offer with a fixed interest rate regardless of the individual credit rating, currently get a loan at an interest rate of between four and five percent. It does not matter to which model the loan seeker tends: before the loan application, a comparison to the current offers is recommended. This is possible online uncomplicated.