What is a loan?

What is a loan?

Credit is a collective term behind many different forms of property and money lending concealed. Basically, a distinction is made between personal loans and bank loans. The term personal loan is to be distinguished from the “private credit”. Colloquially, they are sometimes equated, but: while the first term refers to the situation of the borrower, the latter refers to the origin of borrowed money.

What are the aspects of a loan?

Loans are mainly distinguished by the following aspects:

  • Amount: Depending on the sum taken, loans are referred to as small, medium and large loans, and installment loans, for example, usually fall into the former category.
  • Duration: A period of up to six months is considered to be short-term; from the age of four, the loan is termed as long-term.
  • Use: Loans for acquisitions and vacation are considered consumer credit, of which, for example, the intermediate credit stands out, which serves for the construction financing or a similar project for bridging.
  • Type of collateralization: In the case of a personal loan, the creditworthiness of the borrower is decisive for ensuring that it is granted; for a material loan, it is assets or tangible assets.
  • Lender: Does the loan come from a bank, the employer, the state, or is it a private loan?
  • Borrower: Is the loan taken up by private individuals or business customers, banks or the state?

Which forms of personal credit are there?

Which forms of personal credit are there?

GT loans are granted in various forms. Ultimately, the purpose and duration of the use and the personal requirements for flexibility decide which, in each case, makes the most sense. In the area of personal loans, these are the most important characteristics:

  • Disposition credit: Also called Dispo for short, an overdraft facility in connection with the current account, usually for low amounts and short maturities, flexible but often with high interest rates.
  • Installment Loan: Often referred to as Consumer Loan and Acquired for Acquisition, it will be paid off at fixed rates and interest rates over an agreed period.
  • Frame Loan: Also known as Severance Loan, where money can be borrowed and repaid as needed within a set framework.
  • Securities Lending: Lending the securities account, can be used to buy new shares as well as many providers purposeless, often a cheap loan.
  • Policy Loans: Lending life insurance or pension, a flexible and also often cheaper loan, but if not repaid, can have a negative impact on old-age provision.
  • Mortgage lending: Long-term credit for the purchase or construction of a property, often composed of several components such as home savings loans and non-cash loans.

What do I need for the loan application?

What do I need for the loan application?

 

Normally, salary or pay statements must show the income of the last three months. Often account statements are required, which represent the complete private income and expenditure. In addition, a self-assessment is required, where part of it is considered as a household bill and in the other part, information on payment behavior is queried.

In the case of self-employed, business evaluations (BWA) are required, often also lendable insurances or other collateral. Retirees often have an age limit of between 65 and 75, depending on the bank.

How can I rate a loan offer?

How can I rate a loan offer?

 

“Best credit for any purpose” or “Cheap finance without risk” are typical advertising statements, as everyone knows. These promises are then usually only valid for certain groups of people, other conditions must be met.

Basically, loans with purpose are cheaper, because the purpose of purchase (car, real estate, etc.) serves as collateral. Typical installment loans are not collateralized, ie at leisure, with only salary claims being assigned to the bank.

Do you want to get out early if it is financially feasible? Then special redemptions should be possible. Also, check the utility charges, they must be listed in the product information sheet of the bank. This consumer information is uniform throughout the EU.

Is there a loan for the unemployed?

Is there a loan for the unemployed?

Unemployed people are not fundamentally excluded from lending in Germany, but banks always require a co-applicant. This must be able to prove an attachable income, that is above the attachment exemption limit. It is updated every two years by a garnishment table and prevents the subsistence level from being endangered.

In 2015, the limit for earned income is 1,045.04 euros per month, for debtors without maintenance obligations. For the first debtor, this value increases by 393.30 euros, each additional is added with 219.12 euros. In some cases, the Federal Employment Agency can intervene, but special uses according to § 22 SGB II have to be proven.

What is behind a loan without interest?

What is behind a loan without interest?

 

Such offers are available from department stores and sometimes also from car dealers who work with the respective Autobank. They are intended to increase the sales of certain products or even model series and are therefore often linked to these offers or specific periods.

For you as a borrower, these loans are actually at no extra cost, however, the dealer must give the bank a default insurance and internally pays an interest for this. These costs are added to the purchase price, often alternative offers are cheaper. In addition, consumer advocates criticize the zero-percent financing.

What is behind the two-thirds interest?

According to § 6 PAngV, banks must declare an effective annual interest rate, which is actually granted to customers. This is intended to prevent lures that distort the market. Of course, that’s no guarantee that you’ll get that interest rate yourself. But he helps to compare the different offers.

What effect does the comparison have on my Schufa?

Schufa stores the payment experience of banks, mail-order companies, telecommunications companies, and Co. In doing so, different scores are calculated for each industry, which should represent a statistical probability of default.

If you have multiple credits that have been properly fulfilled, this increases the value. On the other hand, garnishments, credit cancellations, enforceable titles or even insolvency proceedings lead to negative values.

The comparison is a neutral condition request, which is only given for information for ten days. Only with the actual realization of a loan a Schufa entry is created, which also affects the score.

Which different lenders are there?

Which different lenders are there?

The bank is a classic point of contact for a private loan, but there are still many more jobs as lenders. Thus, the neighbor grants a property loan if he temporarily helps out with sugar and eggs, while the online retailer offers a supplier credit as soon as he sends the goods without advance payment. By contrast, larger sums in the form of an installment loan are given to furniture stores, car dealers and other sellers of expensive goods, who accept installment payments – usually including a fixed interest rate.

Condition request or credit inquiry – where is the difference?

Condition request or credit inquiry - where is the difference?

 

To distinguish between requests for terms and offers, there are two characteristics: the condition request and the credit request. If you only want to ask for the credit terms of a bank without asking for a concrete offer, this will be saved in your Schufa database as a condition request. This is visible only to the consumer.

On the other hand, if you obtain a concrete loan offer, your Schufa file receives the characteristic “request credit”. This is saved by the Schufa for one year and is visible to other banks for ten days. Loan requests are negatively included in the score calculation.

How many years should I commit myself?

With installment loans, the term can be agreed individually according to your personal circumstances and the use of credit. If the monthly burdens allow, a shorter term is recommended. Also pay attention to whether the bank charges processing fees, as these will make the loan relatively expensive for a short term. With a short-term, the monthly installments will be higher, but the overall cost will be lower, as the effective rate is usually lower. The maturities of installment loans are usually between 12 and 72 months.

Important: The term of the installment loan should basically not exceed the useful life of the purchased item. Some banks give installment loans for the car or motorcycle purchase with a term of up to 24 months on particularly favorable terms (car loan).

What is the difference between nominal and effective interest rates?

The nominal interest rate indicates the amount of interest on your loan and is used to calculate the interest rate that you pay to the lender. The agreed interest remains guaranteed over the entire term.

In contrast to the nominal interest rate, the effective interest rate to be reported in accordance with the Price Indication Regulation takes into account price-determining factors from the regular credit history. The price-determining factors are the nominal interest rate, processing fees, interest and redemption settlement dates, repayment rate, start and amount as well as the payout price. These factors are distributed in the calculation to the agreed fixed interest period. The result is the effective interest rate, which gives you the total cost of the loan per year in percent and serves as a theoretical benchmark. You can now compare loan offers with the same fixed interest period using the effective interest rate. For this purpose, however, all price-determining factors must be identical in the respective offers except for the nominal interest rate. Unfortunately, as the calculation factors are not always given to you, a price comparison over the effective interest rate is only possible to a limited extent.

The comparison is made even more difficult by a number of other costs which are not included in the effective interest rate. We, therefore, recommend that you examine in addition to the effective interest rate, the further costs for the loan you require.

What costs do I get for an installment loan?

What costs do I get for an installment loan?

When you use an installment loan, you only pay for interest. Compare also our top conditions. Upon request, you can take out a residual debt insurance.

NO costs will be incurred for negative declarations, agency fees, account maintenance fees, costs for reimbursement of expenses, cash on delivery fees and closing fees! In the area of consumer credit (installment credit), Article 4 (1) of the Consumer Credit Law (VerbrKrG) prescribes the sum of the costs in the written loan agreement. In general, the provisions of the Price Indications Regulation must also be observed for installment loans (including the APR).

Can I cancel loans?

Yes, you have the right to repay loans prematurely, eg by taking out a cheaper loan from another bank. However, the processing fee paid by you will not be refunded by the relieved bank. During the agreed interest fixing period/loan term you can terminate the loan at the earliest 3 months with a notice period of 3 months and repay the outstanding loan amount due to the legal regulations.

You can also repay partial amounts at most banks during the agreed term. With installment loans, the monthly rate remains the same and it shortens the term. Under certain conditions, there is an extraordinary right of termination on the part of the borrower, but also of the lender.

Monetary value

The term monetary value is less frequently used in the context discussed here, and the terminology of purchasing power is more popular. Both terms, however, designate the same state. By monetary value is meant the value needed to acquire a particular commodity in a currency area. It is true that the monetary value is variable. The terms for this variability are inflation and deflation.

Inflation and deflation

 Inflation and deflation

Inflation, the loss of purchasing power, means that for a given good at a later date, a higher price has to be paid than at an earlier point in time. By contrast, deflation means that less money has to be paid for a commodity at a later date than at an earlier one. If no price change takes place during the same period, the term for constant prices is stagnation.

Determination of the monetary value

 Determination of the monetary value

In order to be able to measure the monetary value of an economy, every product available on the market can hardly be considered individually. Against this background, the Federal Statistical Office has compiled a representative shopping cart that weights the individual product groups differently. For the year 2010, the percentage composition was as follows:

 
1 Food, soft drinks 10.3%
2 Tobacco goods, alcoholic beverages 3.8%
3 Clothing, shoes 4.5%
4 Apartment, water, gas, fuel 31.7%
5 Furnishings 5.0%
6 Health, care 4.4%
7 traffic 13.5%
8th signaling 3.0%
9 Leisure, culture, entertainment 11.5%
10 Education 0.9%
11 Hotel, restaurants 4.5%
12 Other goods and services 7.0%
 

Price development is measured individually for each of these twelve groups and then included as a percentage in the overall analysis. The weighting of the individual types of goods within the basket of goods is constantly being revised. The share of tobacco and alcoholic beverages, for example, is declining, while the weighting of housing, water, gas and fuels has increased, as these positions place a significant burden on households.

The monetary value in the external relationship

 The monetary value in the external relationship

The monetary value can be measured not only in the internal relationship, but also in comparison to other economies. This is done by fixing exchange rates. Although exchange rates for freely tradable currencies result from supply and demand, these two factors are not only based on the monetary value of the currency in domestic trade. Here it should be noted that speculative approaches by investors may cause the external value of a currency to deviate from the actual monetary value in Germany.

The specter of monetary loss

 The specter of monetary loss

Inflation is the biggest enemy of consumers. All the more desirable would be a deflation, an increase in the monetary value. The opposite is true, however. A deflation is poison for the economy, a moderate inflation of up to two percent of the ideal condition. Deflation is the result of a lack of demand, which in turn results from insufficient disposable income among consumers. Income shortage is usually the result of lack of employment. Companies have to sell their goods, so they have to lower prices, and there is no need to continue to produce. Conversely, inflation is the result of increased demand as demand determines the price. Increased demand results from higher disposable income, which, as seen by the economy, results from a higher level of employment. Against this background, it is thus confirmed that a slight loss of monetary value is ultimately an indicator of a functioning economy.

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News Car insurance for novice drivers: That’s how young people save money

News Car insurance for novice drivers: That’s how young people save money

finanzen.de News always well informed

Tuesday, 15.08.17 , written by Annabell Meyer The joy of passing the driver’s license exam is great with many novice drivers. However, this is quickly clouded when it comes to the car insurance of the first own car. When it comes to protection, young people usually have to dig deep into their pockets. With some tips, however, can find a cheap car insurance for novice drivers. >

Bei der Autoversicherung für Fahranfänger gibt es Sparmöglichkeiten

Young drivers can save some car insurance tips

  • New drivers are often considered as “risk factors” in motor insurance and therefore have to pay more than experienced insured persons.
  • Even young drivers with the right car insurance and some tips can save a lot of money.
  • In order to find a cheap car insurance for novice drivers, it is advisable to compare different offers.

Young people who have recently obtained their driving license are often considered a high-risk car insurance company due to their lack of experience. Because statistically they cause more accidents than drivers with more driving experience. Many insurers therefore classify novice drivers in the non-infringement category 0 and can be paid for the protection of the car with a premium of up to 240 percent of the actual contribution. As a result, high car insurance costs of more than 1,000 euros per year are quickly coming together. Such sums of money can and do not want to be tackled by very few novice drivers. There are different ways in which young people can save money on car insurance.

Car insurance for young people: benefits before costs

A simple way to save on car insurance is to pay contributions not every month, but once a year in advance . For this, some insurers offer their customers a discount on the cost of car insurance. New drivers can also save if they restrict the benefits of the hedge. For example, if young drivers only agree to motor liability insurance and waive the additional protection of a full or partial coverage, the contributions will be lower. However, they will have to pay for their own vehicle damage.

If this is too risky, you can reduce car insurance premiums by accepting a deductible . This means that the insured pays part of the costs out of pocket in the event of an accident. Some companies also reduce the premiums if the customer agrees to a workshop commitment, ie has his vehicle repaired only in a specific workshop.

Service: Young drivers usually have only a small amount of money at their disposal, and pay particular attention to the contribution level for car insurance. Despite the great savings potential, but the benefits. With the comparison calculator can find a cheap car insurance for novice drivers, which is also powerful.

  • Our service for you
  • Put an end to the high contributions of your car insurance.
  • Compare fares

Car insurance for novice drivers: Second car registration saves money

Further savings potential arises in the car insurance, if novice drivers to insure the car as a second car on the parents. Because these usually already have a higher damage class. As a result, the new vehicle is better classified. However, it is important to extend the driver’s circle to the next generation.

Many providers classify the second car at least in the damage class ½ or better. This usually corresponds to a premium between 120 and 140 percent. Thus, the contribution can be reduced at least somewhat compared to the damage-free class 0.

Take no-claims discount from relatives

In addition, young people can take on the damage-free class of a relative in order to reduce their contributions to motor insurance. If, for example, the grandfather of a novice driver no longer wants to drive on his own, the grandson can take over his claim-free class.

However, this step is worthwhile only if the young driver has his driving license for several years. Because only so many accident-free years can be transferred as damage-free discount, as the novice driver himself could have achieved .

Cheap car insurance for young people thanks to telematics tariffs

Some companies offer novice drivers the possibility to reduce their insurance costs via telematics tariffs. Thus, young drivers who convince with a predictive and safe driving style benefit from up to 30 percent savings. For this, they have to monitor their trips via an app or a black box in the car.

In addition, young drivers can save if they decide to participate in the so-called “Accompanying driving from 17”. Here, novice drivers who have already acquired their driving license before the age of 18 have the opportunity to gather driving experience with their parents until they reach the age of majority. Some insurers acknowledge this with lower contributions.

  • Here you can find tips and more information about car insurance. >
  • Annabell Meyer
  • editorial staff

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Supreme Court ruling: Debtors can revoke installment loans easier

The consumer advocates speak of a “new hope at exorbitant rates loans”. however, reacted banks to a judgment of the Federal Court (BGH), which has strengthened the position of the borrower.

The consumer advocates speak of a “new hope at exorbitant rates loans”. However, reacted banks on a judgment of the Federal High Court (BGH). Do not expect cancellation wave in installment loans, which have a volume of 140 billion euros in Germany. What is certain is that the Supreme Court has strengthened the position of the borrowers.

Who at the same time completing a payment protection insurance with a loan, is in the future a greater chance to get out again from both contracts. The results from a landmark judgment, the Federal Court of Justice against the Citibank felled. So far, this question had been judges of the lower court instances controversial.

The decisive factor is payment protection insurance

This judgment is preceded by years of dispute between consumer advocates and banks. The consumer advocate throwing the institutes’ credit usury “before because they coupled granting consumer loans to systematically balance insurance. These policies jumping one in the case of unemployment, disability or death and take over the payment of installments to the bank. Thus, the banks secure against default. Especially-prime borrowers such insurance should be the rule.

In the current dispute, a couple from Cologne had taken a consumer loan at the Institute. When the couple wanted to break prematurely from their obligations, they appealed to the fact that the bank, they did not inform sufficiently about their right of withdrawal. Citibank had in fact not noted that it was for credit and insurance to “related operations”. In such a case, individuals are no longer bound to both contracts – even if they have revoked only one of them.

The supreme civil court now ruled that the bank would have the spouses in this law must point. Because they had not done this in a pre-printed instruction, customers could withdraw even after the regular period of two weeks without any explanation of the entire business. However, the judges made their classification depending on the specific circumstances. In this case, Citibank had specifically referred to the insurer in the loan agreement as their “partner”; both contracts increased relative to each other, respectively. The recorded loan amount was increased by the cost of the premium.

In addition, the Bank Division of the Supreme Court indicated that the couple over this partial amount could not dispose of freely; He was rather paid directly to the insurance company. Finally, the effectiveness of the loan agreement was explicitly dependent on the conclusion of the insurance. Thus, both agreements were seen from the judge an “economic unit” (Ref .: XI ZR 45/09).

Economic unit between credit and insurance

For the provision of payment protection insurance, banks collect and commissions by insurers. In the business with installment loans institutions such as Citibank, Santander or team bench are leaders. With payment protection insurance, the insurer Cardiff, Cigna, Swiss Life and Delta Lloyd have high market shares. So far the criticism of consumer protection is inconclusive fizzles. Even the Supreme Court ruling does not increase the chances of enforcing the required of them including the cost of insurance in the effective interest rate. This provides even the new Consumer Credit Act, which comes into force in June of 2010. Arno Gottschalk from the consumer center Bremen criticized the lack of transparency in the cost of payment protection insurance. The contribution for this is to avoid paying month after month but comes with a single premium, which will co-financed through an increase of the loan. This has, according to Gottschalk often the effective cost of borrowing of 20, 30 percent or even more consequence.

He demands that banks offer customers the loans with or without insurance, disclose the commission and shall show the monthly payment under the policy. However, the banks are hard to prove systematic coupling shops. Thus arose from an investigation by the Financial in spring 2007 no clues. The trade association representing 57 consumer finance and automotive banks, countered with a given by him at the GfK market research institute commissioned study. Thus, only 27 percent of the rates borrowers have taken out payment protection insurance. Two-thirds of customers considered this to be useful.