March 9, 2019

Take out a loan

Who needs financial resources, probably thinking of a loan. There are many reasons for this, but the person looking for a loan should be aware of how expensive a loan is and what the monthly costs are. There are several types of credit, from the Dispo to the installment loan and real estate loan. A loan should only be requested if the creditworthiness of the person seeking credit is sufficient.

The conditions

Anyone who decides on a loan, should be informed in detail about this. As a prospect for a loan, various requirements must be met. On the one hand there is the age of the loan seeker, who moves from the age of majority to old age. Many people no longer receive credit in old age because of their age. For a number of banks, lending ends at the latest at the age of 70. Also, then only a small loan can be granted. There may be a larger amount of credit, but it must be secured with a guarantor.

Age of majority is compulsory; anyone under the age of 18 may not receive a loan unless the young person already earns well and the parents vouch for him. But that varies from bank to bank. So it is also important where a loan seeker lives. Here in Germany the condition applies that the customer also has his domicile here. If an employee or a worker with a regular income wants a loan, the bank expects the loan to be repaid.

Restrictions have retirees with their pension payments. It is just as difficult when an employment contract is limited or the loan seeker is still in the probationary period.

Those who are self-employed and have a high income are excluded from normal lending. The reason is that the income from a self-employed activity is fluctuating and therefore not well planable. Banks have their policies and they are, a sufficiently high income from a non-self-employment. That means predictable interest and reliable repayment.

Very important is the creditworthiness of the customer, he must have no negative entries in his private credit. These show the banks that there had been financial difficulties in the past. Particularly limited is the customer, the credit terminations and Kontoündigungen, disclosure silk and bankruptcies in the private credit has.

The approval features

If, for example, a consumer loan is taken out, which is approved for consumption financing, the banks will generally demand proof of income. Thus, the customer can prove that he has sufficient income, so that the loan can be repaid correctly. Some banks are happy to present bank statements so they can control revenue and expenses. This often also checks the data provided by the customer.

Banks also make salary statements dependent on the different professions. Who is employed, who must submit the last two to three payslips, with a pensioner the last pension notice. If you are self-employed, you usually do not have a consistent salary. These clients then have to submit their income through business evaluations, such as income notices, for the last two to three years.

Since this profession is often dependent on the payments of its customers, so that the self-employed can come into financial difficulties, a loan will be difficult.

Taking out a loan requires the bank, in addition to a positive private credit, also collateral in order to reduce the credit default. Banks often want to sell the borrower a residual debt insurance. However, it only makes sense if it takes a large amount to take out a loan with a long term. Here the failure possibility seems to be particularly large. But who decides for a small loan, for the residual debt insurance is much too expensive.

The cost of a residual debt insurance can burden a loan so that the customer can not pay him. If one considers that the contributions for such an insurance are written completely on the loan amount, the customer can still pay interest for the remaining debt insurance.

The private credit

If the loan seeker has a negative private credit, lending looks a bit different. Three approval features have banks in the loan approval. Those are the sufficiently high income, the permanent employment and the clean private credit.If these framework conditions are fulfilled, then the customer can take up a loan. If the conditions are not met, the credit can be secured with a co-applicant or guarantor.

Anyone who wants to take out a loan can also be provided with other collateral, such as a real estate or a lendable life insurance. Increasingly, clean private credit is the most important instrument in taking out a loan. The forms of credit are divided into the earmarked loan and the non-earmarked loan. When earmarked credit one thinks of a car loan. Here the car will be the property of the bank until full payment.

Since banks have different terms, the loan seeker should necessarily take out a loan to make a credit comparison. So he can filter out the best providers with their conditions.

The foreign credit

If the person looking for a loan who has a bad private credit can not take out a loan in this country, then he or she will be left with the non-schafa loans granted by foreign banks. They come mainly from Switzerland and Liechtenstein and are advertised by credit intermediaries. Foreign banks do not work with a private credit information and a credit record is not registered in the private credit.

However, these banks have strict audit guidelines. There must be a sufficiently high income above the exemption limit. The limit is 1,100 euros for a single person. The permanent employment is presumed with at least six months inventory. Taking out a loan abroad must expect that only two loan amounts will be approved.

On the one hand, this is 3,500 euros, on the other 5,000 euros. If you need more money, you have to provide other collateral. To what extent a foreign bank but a property or life insurance is recognized as security, would be questioned. That could be the credit broker telling his client. In the case of a credit intermediary, the customer wishing to take out a loan must take care not to assign the order to any frivolous agent.

These credit intermediaries can be recognized if, for example, advance payment or dubious insurance contracts are required. Anyone who selects a loan provider with a little care will also recognize this by the terms and conditions of the individual agents. Looking for one should be one of the longest established in this business.

The application

It is advisable to each borrower that he correctly repays this type of loan, because if there is a default, immediately the garnishment is carried out. For this reason, the customer must already sign a declaration of attachment when applying for credit. For the income the customer should know, that it should have at least a attachable share of 80-100 Euro.

The application is simple, it is a loan application with personal information, the loan amount and the term provided. As a result, the credit intermediary will make a preliminary loan commitment. However, the loan is finally approved once the bank has received the required credit check documentation. How quickly a loan is eventually paid out is also a bit of a concern for the customer, how quickly he sends the documents by post.

Another tip: If you need more money and the customer would like to borrow from a foreign bank, then he should grant the bank private credit insights. He gets much better conditions than without.