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?
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?
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?
“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?
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?
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?
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?
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?
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.