A loan is the temporary use of money or a certain thing for a precisely defined period of time. Well-known loans are, for example, the installment loan, the construction loan or the loan without Credit Bureau. Most of the loans are “paid loans”. This means that the borrower must also pay an interest for the use of the money in addition to the loan amount taken out. This guide gives you all the relevant information on the subject of credit. How to find the right loan today!
Find the right loan
At the beginning there is the question: What do I need a loan for? Car, vacation or debt restructuring? What monthly installments can I afford? So that you can now find the best loan, we have created our own loan calculator: This requires the information “loan amount”, “term” and “purpose” from you. He then issues non-binding credit options. The best: The loans issued from our loan calculator all come from verified providers, which we recommend 100%.
This is how a loan is composed
Anyone interested in borrowing should know the basic facts. In the following section we look at the individual components of loans:
Fundamentally, borrowers have to differentiate between target and effective interest rates. The borrowing rate is an “adjusted” interest rate that is only of limited importance for the total loan costs. Borrowers who want to permanently secure the cheapest loan offer should pay particular attention to the effective interest rate when comparing loans. In contrast to the borrowing rate, the effective interest rate is variable. It can be influenced by the borrower. A low effective interest rate can usually be accessed by consumers who have a high income and a positive Credit Bureau. In practice, borrowers with a low income have to expect significantly higher interest rates. However, they also have the option of influencing the effective interest rate – for example, over the term and loan amount.
Term and loan amount
These parameters can now be set individually by the borrower for most types of credit. A basic distinction must be made between short, medium and long-term loans. A short-term loan is a loan liability that runs for up to six months. Medium-term loans have a term of six months to three years. Long-term loans come with a term of three or more years. Term and loan amount always define the repayment that the borrower has to make.
With classic installment repayment, the borrower can plan the monthly charge precisely in advance by choosing the term and the loan amount. Since he reduces the remaining debt more quickly with a short term, this results in lower interest costs for him. The total loan costs are also lower with short terms and low loan amounts because the banks can expect a lower risk and lower capital commitment here. Of course, this is reflected in the amount of the interest.
Most private loan types offer installment repayment: Installment repayment means that the entire loan amount is repaid in installments. The borrower can control the amount of the installments based on the term and the amount of the loan. The repayment of installments proves to be very safe for borrowers and banks due to the constant financial burden. Since the borrower can quickly reduce the remaining debt when repaying the installment, the interest costs decrease as the repayment increases.
In addition to installment repayment, annuity repayment has established itself in the private customer business. Similar to the installment repayment, the borrower makes the repayment in several installments, which are also precisely timed here. In contrast to the repayment of installments, the borrower pays an exact annuity for the repayment, which consists of an interest component and a repayment component. While the repayment increases with the term, the remaining debt decreases with the term.
Finally, the final installment is to be mentioned, which, however, is of little importance in practice. The final installment is characterized by the fact that during the term of the borrower only the interest on the loan taken out is paid. Only at the end of the term does the borrower actually have to repay the loan. The interest is calculated from the net loan amount over the entire term. For this reason, the borrower must expect significantly higher total loan costs for the final installment repayment than, for example, the case for installment or annuity repayment.
You will need these documents for a loan
The requirements for the documents to be submitted for a loan application online and in the bank branch are usually completely identical. Advantage of online loans. The processing of the request and the subsequent payment is usually faster due to the completely digital processes.
For your loan request, first enter the desired loan amount, the desired term, the type of loan (purpose) and your income. If you want a loan without Credit Bureau, where the credit is not entered in the Credit Bureau file, please also indicate this point.
With the reputable providers recommended by us, you usually receive feedback on the same day on the loan request. If you accept the loan on the terms offered, hand over the following documents to the lender:
- Permission for a credit check
- Proof of your income (e.g. last pay slip)
- Proof of your identity (PostIdent or video chat)
Not getting a loan: it could be because of that
A credit cancellation must always be considered individually. However, the following reasons are most common and can prevent a loan:
- No permanent residence in Germany
- No permanent employment
- Not enough creditworthiness
- No legal age
The lender is legally bound by requirements. In addition, the possible own credit default should be prevented and a borrower should be protected against over-indebtedness. However, from the discussions with lenders that we recommend on lite lender, we know that a suitable loan provider can often be found even in difficult cases.
Our tip: A second borrower, colloquially often referred to as a guarantor, can often help with a loan in the case of the above problems.
There are these types of loans
In general, a distinction is made between personal and bank loans. A personal loan is a loan agreement that is concluded between a private lender and a private borrower. This can be done orally or in writing. However, the written variant is preferable. In contrast to bank loans, there is no monetary value added with classic personal loans.
The bank loan
Bank credit is a loan agreement that is concluded between a borrower and a credit institution. The loan is one of the most common types of credit. A loan is the transfer of the use of money or goods. The basis of the loan is always the loan contract that is concluded between the lender and the borrower.
As a rule, loans are linked to a fixed repayment, which today the borrower can usually arrange according to his own requirements. Loans are sometimes subject to different uses, and there is no requirement for use.
The cash advance
The cash loan is another type of credit. With a cash loan, a loan is granted in a current or separate account. The cash loan is a temporary loan that can fluctuate during the repayment phase. For example, the borrower can extend the loan or significantly reduce the remaining debt in a partial amount through a special repayment. The cash loan does not usually provide an exact repayment schedule.
The lender also charges interest on the taking out of a cash loan, for example in the form of an overdraft facility or overdraft facility. A commitment interest or a loan commission can also be incurred.
What is the overdraft facility loan?
The overdraft facility granted on German current accounts is often called “overdraft facility” in everyday language. This is the possibility for private individuals to “overdraw” their salary account in a previously limited amount by the account-holding financial institution. Without a corresponding agreement, payments via the current account must be covered by sufficient funds in the account.
An account is considered “overdrafted” if credit or a separately negotiated loan are not sufficient to cover bank deposits, but these actions are nevertheless carried out by the bank. In this case, the bank only tolerates the overdraft; there can be no question of a loan here. For the current account, which is overdrawn in this way, the bank calculates debt interest on a daily basis, the amount of which varies from institution to institution and is also dependent on general interest rate developments.
On the other hand, one speaks of an overdraft facility if the bank grants the current account holder the right to overdraw his current account by a certain amount by means of a unilateral contractual arrangement. In contrast to a consumer loan, the debtor incurs no costs other than interest at a overdraft facility. Moreover, the interest will be debited to the borrower’s checking account in no less than a quarterly period. A credit facility is traditionally the most expensive way to borrow money. In addition, credit institutions usually only pass on the market’s rate cuts to their customers with great delay, if at all.
Even if the key interest rate of the Capital Lender is at an all-time low, banks are reluctant to pass on low interest rates to consumers. They are not obliged to base the Capital Lender’s key rate on the basis of their interest calculations, but can also use other guidelines. Therefore, overdraft facilities remain an expensive proposition for consumers at most banks. And if the customer even exceeds his approved credit line, the interest rates will skyrocket.
Debt restructuring: Switch to the cheaper loan
In the event of debt restructuring, the borrower repays an existing debt by taking out a new loan. Consumers can reduce their monthly costs by combining several loans. Since there are certain minimum rates for most loans, the monthly rate for a single loan with a correspondingly long term is usually significantly lower.
Debt installment loans
The easiest way is to reschedule a conventional installment loan. Whether such a debt restructuring is worthwhile depends primarily on the interest rates currently offered. If these are significantly lower than those of the existing loan, debt rescheduling is recommended in any case. In addition to the interest rates, consumers should also take a look at the contractual clauses of the existing loan before rescheduling. In the event of early repayment of a loan, credit institutions often have the option of requesting a prepayment penalty from the borrower.
Our tip – please note: Whether debt restructuring is worthwhile in individual cases always depends on the interest savings. Borrowers still have to deduct any prepayment penalty from this. The cheapest loan can then be found using a loan comparison. Before applying for the new loan, you should inquire with the bank about the amount required to repay the loan. It is important to state the purpose of “debt rescheduling” when applying for the loan. Otherwise, the banks assume an additional loan and may refuse the request. Most banks also take over the repayment of the existing loan: simply grant the new bank a power of attorney; This then takes care of all other formalities.
The well-known loan without Credit Bureau
Even today, most types of loan in the private customer sector are only granted taking into account the Credit Bureau. Credit Bureau offers the bank the opportunity to gain an overview of the customer’s solvency. The Protection Association for General Loan Protection stores all relevant data that could be of importance for lending. For example, the borrowing information of every borrower lists rental contracts, other contractual commitments or loan defaults or existing credit liabilities. Borrowers with a positive Credit Bureau information have the opportunity to revaluate their creditworthiness at a crucial point. Borrowers with a negative Credit Bureau, on the other hand, can expect the loan application to be rejected. Alternatively, they have to resort to another type of loan, namely a loan without Credit Bureau.
Build with the construction loan
Mortgage lending is a special type of loan. The construction finance is used to build or purchase a property. Repayment is often made in the form of a fixed annuity over a period of up to 30 years.
Since mortgage lending is generally a long-term loan liability, the bank often requests mortgages from the bank to secure the loan. The mortgage or the mortgage can be counted among the mortgages. In addition to the actual interest costs, the borrower often incurs processing fees for mortgage lending. Payouts are not uncommon.
The installment loan: the most common loan
Installment credit is the most common form of credit. It is only granted to private individuals. The amount of the installment loan and the repayment conditions are freely selectable. Thanks to its flexibility, it can be used for almost any investment. Particularly important: The interest rate is always fixed for an installment loan. No matter how long the term is – as a borrower, you do not have to worry that the bank may eventually adjust the interest rate to a changed interest rate level. The same applies to the monthly installment, which, after consultation with the bank, must be paid on a specific day of the month. This also remains constant over the entire term. In addition, lenders and borrowers can individually negotiate the rate before the contract is concluded, so that the installment loan adapts perfectly to the circumstances of the borrower. As a borrower has a full overview of the costs from the start of an installment loan, the risk of over-indebtedness is very low. Because unlike loans with adjusted rates, you know exactly how much money must be available for the loan each month.
In spite of all this, you should always calculate exactly whether the desired installment loan in the desired amount really suits life before borrowing. If you decide to take out a loan, you are usually bound to a repayment agreement for several years. This means that less money is available for free during this period. One must therefore consider whether it is possible to forego the money over such a long distance. Otherwise, the prospect should look for another way to finance the planned investment. These considerations should be particularly useful when it comes to financing luxury goods that are not essential for everyday life.
The amount of installment loans
Installment loans are granted at very different levels. Since the loan can be perfectly adapted to the investment, it can be 500 USD or 500,000 USD. With an installment loan, you don’t always have to inform the bank about the purpose of the money. However, it can happen that the bank shows an interest in the purpose of the loan, especially with larger loan amounts. In such a case, it is also important to give the bank honest information. Otherwise, they could refuse the loan because they fear that the borrower will not repay the loan.
The interest on an installment loan
The interest on an installment loan is usually quite low compared to other loan offers and depends on the credit rating. The better the creditworthiness and the more usable collateral the borrowers can offer the bank, the lower the interest rate. However, since most borrowers mostly use the installment loan to purchase consumer goods, the rates are slightly higher than, for example, with a real estate loan or car finance. Whoever plans this should therefore calculate and consider exactly which type of loan is the most suitable and what can save the most money.
Special loans and rare loans
Microcredit, 10,000 USD credit, 500,000 USD credit or even the “million dollar loan” – many special loans and rare credit names buzz through the internet. Usually, however, there are only other names for the installment loan, which is the most common form of credit. Balloon loans, import credits could be mentioned here, but are of no interest to most private customers. The best way to obtain information on these loans is to refer to the relevant specialist article on our portal.
Loan without a bank – an option?
The only way to get a loan immediately and without effort is through a private lender. However, this means a certain degree of overcoming for most borrowers, since they have to disclose their own financial needs to a friend or relative. Once this hurdle has been overcome, such a loan can be realized within a few minutes.
The biggest advantage of credit without a bank is of course the direct communication with the lender, so that all loan terms can be negotiated quickly and without much effort. In addition, such a lender will not want to check the borrower’s financial situation, but will rely on the borrower’s good reputation. This means that many time factors are excluded in advance.
If borrowers and lenders agree on all factors, nothing stands in the way of paying out the loan. However, even in such a situation, you should take the time to set up a corresponding loan agreement. A credit contract is quick and easy to formulate and sufficiently secures everyone involved. Such a contract should contain both the names and the exact names of the borrowers and lenders. In addition, the loan amount, interest amount and manner of repayment should be included in the contract. If the payment of the money is also documented, borrowers and lenders are on the safe side.
The bank transfer has prevailed for such documentation, but if the payment is made quickly, the lender can also have the receipt of the amount acknowledged by the borrower. There is therefore sufficient documentation of the handover. With the fast communication and rapid availability of funds, it can often take a few hours to days from the request of the loan to its payment. No borrower can get a loan faster. Indeed:
The amount of credit in particular is generally clearly limited and depends on the liquidity and willingness of the lender. This means that only manageable sums can be made available quickly and without bureaucratic effort. For larger amounts, the borrower usually has to use other channels to organize a loan.
I cannot repay the loan
Very important: As soon as you notice that the next installments for your loan will be tight, you should contact the lending institution. Nobody will “tear your head off”. After all, the bank has an interest in ensuring that your finances run smoothly so that you can easily repay the loan.
Your first step should therefore be to contact us. Let the responsible advisor know if you are short of money or if, due to special circumstances, you cannot repay the loan permanently.
The bank then usually proposes to defer (ie postpone) the installments or reduce the monthly payments. At first glance, a friendly and honest conversation seems “embarrassing” or “uncomfortable”, but saves a lot of trouble and is only fair to the lender.
Many borrowers try to sit out the situation as soon as they are unable to repay the loan. This initiates a dunning procedure on the part of the bank, which is subject to additional fees. The personal situation becomes even more uncomfortable.
If all of your installments over the next few months or years are likely to fail, the bank may terminate the loan. In this case, the full repayment of the outstanding amounts in one go would be necessary. Naturally, there is not much to get in this situation, let alone the entire loan amount. In this case, the bank can use the collateral deposited to cover the open costs.
Online loans: Find the right loan online!
Applying for a loan has become much easier for borrowers in recent years. The borrower can process the application on the Internet within a few minutes. The first step to successfully concluding a contract is always to fill out the credit request: In addition to information on the desired loan, information about the person and income must also be made here.
The topic of “credit” has become much more transparent through the Internet. A credit comparison is possible from any smartphone where previously you had to trust the bank advisor. At the same time, loans and loans are quite complex issues, and mistakes or incorrect information can lead to expensive consequences. Offers of information such as our portal bundle all the important facts on the subject of credit so that you can still always make the right choice for your desired loan.