Important when taking up credit
- Choose the right loan
If you want to take out a loan, you should first determine which type of loan is right for you. For example, you can take out a installment loan or finance purchases using your credit line.
- Observe the requirements
As a rule, all banks are subject to certain conditions for granting credit, such as their age of majority, their place of residence in Germany, a permanent employment relationship and a good credit rating. Check in good time whether you fulfill these requirements.
- Select bank type
You can apply for loans from a branch bank or an online bank. Weigh out which type is better for you.
- Compare conditions
With a loan calculator, you can find the best loan offer based on your needs. It always pays to compare.
Whether you want to fulfill a long-cherished wish or have to bridge a financial bottleneck: In some life situations, the best solution is to take out a loan. We explain what you need to consider when borrowing. In any case, a first credit comparison is recommended to get an overview.
Take the appropriate loan
Taking a loan is no shame and usually does not lead to a debt trap. Nevertheless, you should be well informed in advance, so you decide on a loan that is really suitable for you.
These aspects are particularly important:
- Use the term of the loan wisely
The repayment term determines the period over which you repay the loan. It should not be too long or too short. Because with very long maturities, a higher interest rate is often incurred because the risk for the bank increases, that you as a borrower through unemployment, illness or other reasons, the rates can no longer pay.
In addition, the overall cost of the loan is higher because interest rates are incurred over a longer period of time. But you should also avoid running too short because the monthly burden of the installments may be too high.
- Compare interest rates
The amount of the loan interest significantly determines the total cost of the loan. Therefore, you should always carefully compare the interest rates of different providers. The interest rate is usually expressed as a percentage pa (Latin for “per annum”: per year).
The debit interest is the interest that is calculated by the bank but does not yet include all costs. These are included in the effective interest rate, which is why banks are also obliged to publish the effective interest rate in their terms. As a result, the different offers are comparable for you as a borrower.
For the amount of interest, the repayment term is crucial, and often also the collateral and your credit rating play a role. If you have collateral and good credit, you can benefit from lower interest rates. In the case of long-term loans such as mortgage lending, you should also pay attention to the duration of the interest rate commitment. In installment loans, on the other hand, the interest rate remains the same for the entire term.
- Processing fees are inadmissible
In the meantime, processing fees for loans are inadmissible according to a judgment of the Federal Court of Justice. Corresponding clauses are therefore ineffective. You can also reclaim the fees, which are usually calculated as a percentage of the loan amount, for loans that are already in progress.
Dispo or installment loan: Which loan fits my project?
If you need money and want to take out a loan, you should first determine what type of loan is right for you.
If you are not planning a mortgage or have any other very high financing requirements, usually the decision is between a credit line and an installment loan.
line of credit
You can use the disposition credit (in short: credit line or disposition ) to cover your checking account. The amount that is granted to you depends on your regular cash receipts and your credit rating. A formal loan application is not necessary. The interest rates are higher on the credit line than on the installment loan, so you should only use it to cover a short-term cash requirement.
But he is well suited because he is immediately available and can be compensated again at any time, so has no fixed term.
If you overdraw your account beyond the dispolimit, overdraft rates that are even higher than the disbursement interest will be incurred. Therefore, the credit line is not suitable to make larger purchases, because you have to accept a higher interest burden and also in case of further financial constraints can no longer use the credit line.
A installment loan, on the other hand, offers cheaper interest rates and is therefore more suitable if you want to finance an acquisition with it. It has a fixed term between 12 and 120 months and a fixed interest rate, so you can plan the repayment well.
If you suddenly have more money during the term, you can replace the loan immediately. In that case, a prepayment penalty often accrues, but this is less than the interest cost of the remaining installments.
What requirements do I have to fulfill for accepting a loan?
- Age: In order to take out a loan, you must be of legal age, ie have completed at least the age of 18 and thus be fully capable of acting. For seniors, it is often more difficult to obtain a loan because banks and savings banks assume a higher risk of death here. With low loan amounts, a loan for retirees but still be possible.
- Residence: A condition for granting the loan is a permanent residence in Germany.
- Probationary period: You must already have completed the probationary period in your employment relationship. Otherwise, the risk for the bank is too high that you lose your job and therefore default in payment.
- Permanent employment: A permanent position is often a prerequisite for lending. In the case of a fixed-term contract, however, a loan is often possible if the duration does not exceed the duration of the employment contract. For the self-employed, borrowing is usually more difficult because their income is less predictable than that of employees.
- Proof of income: As a rule, you must provide proof of income so that the bank can check whether your income is sufficient for the timely repayment of the loan. In the case of employees, the last two or three pay slips are sufficient, but for the self-employed the situation is more difficult: they have to prove the income of the past two or three years, for example via a business evaluation (BWA), income tax assessment or profit and loss statements (P & L),
- Private credit entries: Banks obtain a credit report from a credit agency, such as the Private credit, before granting the loan. This gives you an overview of your debt level and your payment behavior in the past. Your credit rating is expressed with the Private credit score. A sufficient credit rating without negative Private credit entries is a prerequisite for the approval of most loans. But there is also the possibility of taking out a loan without Private credit, which, however, involves higher interest rates.
- Collateral: Banks often require collateral in the form of property, a life insurance or the conclusion of a residual debt insurance, especially for loans with long terms and a high volume of credit. With a mortgage lending the real estate represents a security, with a car loan frequently the acquired vehicle. A guarantee can also serve as collateral. However, a borrower does not generally have to provide collateral for each loan in order to receive a grant.
Criterion not met? Chances fall!
If one or more of these criteria are not met, the chances of granting the loan decrease. Nevertheless, in many cases, there are other options, such as the credit without credit check.
Where to take credit: branch or online bank?
A loan calculator gives you the ability to compare different offers and choose the one that best suits your needs. The loan comparison provides you with offers from online banks as well as branch banks. You should weigh which variant you prefer.
Properties of the online bank
Online banks often offer cheaper rates because these institutions have lower running costs and can offer better terms. You can make the loan application quickly and easily from home.
Often the payout is faster. On the other hand, you will not get any personal advice from an online bank, at most online or telephone support, which may be less responsive to your needs than an on-site consultant. Online you also have less scope for negotiation: In a personal conversation, you may be able to achieve better terms or convince in the case of an imminent rejection of your application by arguments. This is not possible on the internet.
Properties of the branch bank
This results in the advantages of a loan, which is applied for in a branch: The personal advice, the available scope for negotiation and the greater flexibility in the conditions for a borrowing at a branch bank. It may also be more responsive to problems there, and you can, for example, suspend at a rate.
On the other hand, the advice can also be flawed and there are fewer opportunities for comparison with a single bank. Frequently, the interest rates are noticeably higher than with an online bank.
Compare branch banks online
At some branch banks, you can also find and apply for cheap credit offers on their website. Thereby you combine a favorable interest rate with the possibility of a local contact person.
Take out credit: The process step by step
- Determine credit requirements
First, you need to identify your funding needs to estimate what the exempted loan should be. You also need this size when comparing loans. Financing or borrowing requirements are based on total costs and their existing capital. So, if you plan to buy 10,000 euros and save 5,000 euros, you still have to borrow 5,000 euros.
- revenue and expenditure account
The household bill is an important part of borrowing. This will tell you how much money you can spend each month to pay the installments. To do this, you must realistically assess your income and expenses and calculate the difference. This results in the amount that is available to you every month for repayment. The bank also carries out a household bill on your loan application, but it may be useful to check in advance whether the desired loan amount and the installment amount are realistic.
- loan comparison
A comparison of different providers is always worthwhile if you want to find the best conditions. In a loan calculator, you can enter your data and compare the best offers quickly and clearly. As a rule, you specify at least the loan amount and the desired term.
- file application
Once you have decided on an offer, make a loan application. This application contains all the relevant data about you and the terms of the desired loan, ie the total, the interest rate, the term and the purpose. In addition, you submit important documents such as your salary statements with the loan application so that the bank can verify the accuracy of your information.
- Application check, legitimation via PostIdent, Private credit query
If you have submitted the application, it will be reviewed by the bank. This includes a Private credit query that determines your credit rating. If you have applied for the loan from an online bank, it is also necessary to have your identity authenticated through the PostIdent process.
- paying out
When the loan is approved, you can expect to receive the loan amount in your account within a few days.
questions and answers
Are processing fees charged when borrowing?
No, the Federal Court ruled in 2014 that loan processing fees for personal loans are inadmissible. Already paid fees can reclaim you.
What are the requirements for taking out a loan?
Important prerequisites for borrowing are the age of majority and a place of residence in Germany. An open-ended employment relationship with a sufficient income is usually required. In addition, in most cases a positive Private credit information is needed. Only in the case of a loan without Private credit does this verification no longer apply. However, you usually have to prove your credit rating otherwise.
Can I take a loan as a student?
For students, the special student loan, which was designed specifically to finance a study. It is not paid in one amount, but students receive a fixed monthly allowance to earn a living.
At the latest with completion of the study the disbursement ends. It usually follows a rest period of up to two years, in which graduates can concentrate on starting a career. Thereafter, the repayment of the loan begins. Alternatively to a student loan, students may also take out a loan with a guarantor.
Can I take out a loan as an apprentice?
Borrowing as a trainee is not always easy, because the income is low and the perspective after training proves to be unclear. Banks usually expect at least the probationary period to end. If the repayment term does not exceed the duration of the training, chances are better.
Alternatively, a written commitment to take over by the training company may provide for the granting of a longer repayment term.
What type of loans are there?
Many different types of loans can be determined. For example, the purpose of use may serve as a distinguishing criterion. Here are, for example, the real estate loan or the car loan to call, both of which may be used only for the specified purpose.
But also the conditions are very different: The classic installment credit and the credit rating differ, for example, differently in the amount of interest and the modalities of repayment. Mortgage lending often involves the so-called annuity loan, in which the monthly installments remain the same and the proportion of repayments and interest rates shifts. By contrast, the term loan is only due at the end of its term and in full.