Foreign currency loans and loan at – Opportunities and Risks

Nowadays, real estate financiers not only have the opportunity to finance their valuable assets through a real estate loan from a German bank. Loans from abroad are also increasingly offering attractive terms that should be planned as an alternative. These are loans that are granted in the currency of the respective country. Foreign currency loans always represent final loans in their form, ie the loan amount is paid out first in the foreign currency, then this amount must be exchanged for the local currency again. If the loan is then due again, the reverse is true: your own currency must now be exchanged back into the foreign currency. The main advantage is the much cheaper interest rates that a borrower has to pay abroad.

Foreign currency loans are therefore particularly suitable in high-interest periods when the general interest rate abroad is lower than is the case in Germany. Another advantage is the possibility of an additional currency gain, but this can quickly develop into a disadvantage again – namely if the loan has to be repaid at the end of the term and then has to be exchanged from the local currency to the foreign currency of the lending country , The borrower can almost always assume that the exchange rate of the two currencies will change in relation to each other within the payout and repayment period. Depending on the current exchange rate, this can either result in a currency gain or a currency loss. Example:

The mortgage lender would have to exchange 128,571 USD here so that the lender can get back his loan amount of 180,000 Swiss francs. He would have to accept a currency loss of a whopping 8,571 USD.

Compare offers for foreign currency loans

No matter which financing measure is carried out by the client, the offers available on the market should always be compared. This applies to home purchases as well as to conversions, additions or renovations – and even more so to foreign currency loans. Because even minimal differences in the interest rate will affect not only the amount of interest, but also in credit rate tremendously, since mortgage loans are always concluded for a long term. Most credit institutions that offer mortgage lending therefore also have a comparison calculator. Individual offers should only be obtained after this comparison. If you rely on tailor-made construction finance, you have to take a position with your bank regarding your personal living conditions, the living situation and the known key data of the upcoming construction finance. Offers from foreign banks should not be spared.

Anyone who relies on foreign currency financing from foreign banks should in particular question any currency risks. The offers of foreign lenders can of course be compared with those of German banks. Anyone who relies on global information for their financing will always drive cheaper than people who contact the nearest bank immediately. In addition to the respective providers, all types of credit in question should also be checked and compared. The calculation of the total financing also includes the respective components, such as the monthly comparison of fixed income and expenses and the amount of the monthly loan installment. The mortgage calculators offered on the Internet are helpful for these cases – a helpful tool that, in addition to comparing conditions, also uses the calculation of the various components for the respective real estate loan.

In addition to the interest rate, the interested party can also have the loan amount, the amount of the initial repayment or the monthly loan installment calculated. The respective result depends on the specifications. The most important main component in any real estate financing is the calculation in the interest and repayment plan. What is particularly important here is the distance at which the repayment already made is offset against the remaining debt. As a rule, settlement takes place on a quarterly basis, thus reducing the interest amount.

Regarding the interest rate comparison it should be noted that the builder has to make a decision about whether they want to agree on a variable or a fixed interest rate over a specific period. Only then should the interest rates of the different banks be compared. The following applies: the longer the commitment, the higher the interest rate. however, who puts on advice of little value, should definitely look at direct banks, because here very favorable conditions are always provided. In addition, the offers between the direct banks can be compared very well. This not only eliminates the customer focus, but also the scope for negotiation that you normally enjoy as a long-standing customer at a house bank.

Advantages and disadvantages of online mortgage lending

A mortgage can of course be completed online. The main advantage lies in the mostly better conditions. The same applies, of course, to fees that are significantly higher within a bank’s office due to personnel costs. Another advantage is the quick and comparatively simple processing. With the standard procedures used by the direct banks, a financing processing is guaranteed, starting from the application up to the loan payment. The disadvantage is the lack of advice. The real estate financier should be very familiar with what he wants here. Because even online financing cannot be canceled overnight.

Those who place so care to have to discuss certain aspects with the bank manager, the fingers from online transactions should be. Questions in the online area can only be answered by email or over the phone. However, these means of communication do not replace the on-site consultation.


What do I have to consider when taking out a loan?

Where do I take out a loan?

Where do I take out a loan?

If you want to take out a loan, you have various contact persons from whom you can borrow the money:

  • Relatives, friends or work colleagues
  • other individuals, to be found on special platforms on the Internet
  • employer
  • Banks and savings banks
  • professional credit intermediaries.

The great advantage of a loan among relatives or acquaintances is that in most cases the lender waives interest. Anyone who borrows money from relatives, friends or work colleagues should always remember the well-known saying: “Friendship ends with money.” Even if it is a personal loan among friends, a written loan contract should therefore be concluded. Templates for such contracts can be found online. The sample texts contain all relevant points such as loan amount, amount of installments and collateral for the loan.

Who will finance a loan

Who will finance a loan

There are special platforms on the Internet where private individuals lend money to private borrowers. Borrowing is a bit of a hassle for the applicant. He must describe the project or the purpose for which he needs the money exactly. A photo is very helpful to gain investor confidence. The applicant himself determines which interest rate he pays to the lenders. The higher the interest rate, the greater the likelihood that there will be enough lenders to finance this loan.

Many employers also give low-interest loans to their employees. Therefore, it is often worth asking the HR department whether an employee loan is granted. If so, the employer transfers the desired amount to the employee’s account. The monthly installments are deducted from the salary until the loan is repaid.

Banks and savings banks in Germany also offer loans. Many credit institutions offer both online loans and bank loans that are taken out in a branch. A comparison of interest rates is worthwhile here, since online loans often have a lower interest rate than loans for which an employee has to work in a bank branch.

Not only credit institutions offer loans, but also professional credit brokers on the Internet. However, there are also dubious providers who only collect fees from the applicants, but do not provide loans. To protect themselves from these black sheep, consumers should listen to other borrowers’ experiences. In numerous forums on the Internet, cheated loan seekers warn of those offers that are questionable.


Receive loan despite Credit Bureau entry

A loan without Credit Bureau cannot be obtained from German financial service providers. Credit Bureau-free loans offer advantages that may not be apparent at first glance. However, consumers who opt for this loan option are well advised to obtain extensive information beforehand. This is the only way to ensure that you have a reputable business partner. In the following, the loan without Credit Bureau is explained in detail and the characteristics are discussed.

What is a loan without Credit Bureau?

What is a loan without Credit Bureau?

A loan without Credit Bureau is basically a classic installment loan. The advertisements that refer to this loan variant are well known from the print media. For “Loans even with poor creditworthiness”, “Loans without Credit Bureau for everyone” and similar texts advertise this loan. However, anyone who has dealt with this financial product a little soon realizes that it is not the three major providers who are promoting a loan without Credit Bureau.

Unfortunately, there are numerous black sheep in this business area, which simply and easily rip off. This starts with fees that are charged at the beginning and ends with the applicants having to buy additional products in order to complete the process. Interest rates are also outside normal.

Swiss financial service providers can offer German citizens a Credit Bureau-free loan. This is made possible by the simple fact that there is no institution in Switzerland that acts similarly to the German Credit Bureau. The providers waive both an inquiry to Credit Bureau and a later entry.

There are two main reasons for taking out a loan without Credit Bureau:

1.) The borrower has no credit rating that would enable him to take out a loan from a German bank or savings bank. In Switzerland it is possible to get a loan despite Credit Bureau.

2.) The borrower is planning a larger financing and may not want to worsen his credit scoring with another smaller installment loan. The applicant’s creditworthiness also plays a role in relation to the amount of the interest rate when it comes to mortgage lending.

A loan without Credit Bureau is usually not earmarked. The only exception is construction finance, which can also be settled to a certain extent via a Credit Bureau-free loan. One of the main reasons for taking out such a loan is surely the balancing of a debit balance in the checking account. This also makes sense, since the processing of a loan without Credit Bureau is completely discreet and the installments can also be paid in cash at the bank counter.

Loan provider: BON Kredit ohne Schufa Creditolo Kredit ohne Schufa MAXDA Kredit ohne Schufa CrediMaxx Kredit ohne Schufa
Net loan amount: $ 1,000 to $ 100,000 $ 1,000 to $ 100,000 $ 3,000 to $ 250,000 4,000 to 60,000 $
Running time: 12-120 months 12-120 months 12-84 months 48-120 months
Bearbeitungsbegühr: No Yes No No
to the loan application more details to the loan application more details to the loan application more details to the loan application more details

What is Credit Bureau and what is Credit Bureau information or Credit Bureau query?

Credit Bureau is a private business credit agency. Credit Bureau collects data about consumers and companies in connection with their creditworthiness. All transactions relating to monetary transactions are reported. This includes opening an account and entering into a cell phone contract. The so-called Credit Bureau scoring is created from this and the personal data of the respective person. The Credit Bureau scoring also includes whether a consumer or company has regularly met their payment obligations or whether there were any irregularities. The Credit Bureau scoring has an impact on the credit rating in relation to credit inquiries. Consumers have the opportunity to view their Credit Bureau data once a year free of charge in order to correct them if necessary. The Credit Bureau scoring varies depending on the company querying it, as it checks how the person concerned behaved in relation to the respective industry. Anyone who did not pay their cell phone bill twice has a worse scoring for the cell phone industry than a borrower who proves that the account is properly managed and makes a loan request.

The advantages of a loan without Credit Bureau

As already mentioned, a loan without Credit Bureau offers advantages. Even if an existing loan does not necessarily have to lead to a downgrading of the creditworthiness with further financing, the loan without Credit Bureau offers the certainty that larger financing does not suffer from a small loan. In the case of construction finance, it may well be that a smaller sum is missing in the end for further purchases for the new home. Since the German banks have to act very restrictively as part of the loan expiry, refinancing through a loan without Credit Bureau information is definitely possible. If the applicant’s personal liquidity permits, such a loan creates additional financial leeway despite Credit Bureau. The omission of the Credit Bureau request as well as the loss of a Credit Bureau entry make this loan variant very attractive.

Where can you get credit without Credit Bureau?

The idea that a loan without Credit Bureau is a time-consuming, cross-border issue is wrong. Even the loans despite Credit Bureau entry are confirmed by the lender in the shortest possible time, within a maximum of 24 hours. Of course, we are only talking about reputable brokers who can make a loan request within a few minutes via the Internet.

The intermediaries then use the applicant’s personal information to find a suitable partner from their network. Swiss banks naturally also work according to business principles and make sure that the credit default risk remains low. It cannot hurt if the applicant gives his approval for the mediator to inspect Credit Bureau. This broadens the circle of possible banks that are eligible for a Credit Bureau-free loan. The immediate commitment is based on the information provided by the borrower, who must, however, meet certain criteria.

To put it very clearly: Serious loans without Credit Bureau are not readily granted, the applicant must provide proper self-disclosure and demonstrate that he can pay the monthly installments. If these requirements are met, there is nothing standing in the way of a loan despite Credit Bureau.

Whether it is a rush credit without Credit Bureau or a classic installment loan, it is ultimately up to the borrower how quickly he can access the money. The immediate approval does not mean that the money is paid out immediately, but that the loan approval is given. The necessary documents, salary certificates, etc. must be available at the bank so that payment can be made. Here it is in the interest of the borrower to post these documents promptly after the immediate approval.

Serious credit without Credit Bureau – what to look out for

The brokerage for a loan without Credit Bureau requires that the broker has the relevant experience and an extensive network of partner institutions. Newspaper advertisements with the title “Sofort Cashgeld – also despite Credit Bureau entry” often have anything but a serious background.

The safest way to get a serious loan despite Credit Bureau is through a corresponding provider comparison on the Internet. Over the years, three major intermediaries (Bon-Kredit, Creditolo and Maxda) have emerged in Germany, which consumers can trust without reservation when arranging a Credit Bureaufree loan.

After entering the personal data in the mask, the agent looks for a suitable partner. Once this has been found, the interested party receives an offer that shows the conditions and lists which documents are required.

If the interested party accepts the loan without a Credit Bureau offer, they send back the completed and signed loan agreement with the required papers. The loan is paid out either by transfer to the account or by postman in cash. The return can be made by direct debit, but also discretely by cash payment at a bank.

Important: When selecting the intermediary, the reputable providers are characterized by the fact that the borrower is not charged any additional costs. As with a classic installment loan, the agent is paid exclusively by the bank. Stay away from intermediaries who charge separate costs.

Of course, the idea may be obvious to contact a Swiss bank directly. In Switzerland, however, there are the same differences in terms of interest rates as in Germany. A broker knows the market and saves the borrower from having to do intensive research to find the cheapest offer. In addition, it is not uncommon for brokers to buy large contingents and thus achieve a further discount in interest for their customers.

Credit without Credit Bureau experience – how to find a reputable provider

Serious providers of loans without Credit Bureau can hardly be found in the daily newspapers and also not in the mailbox via leaflets. Reputable providers can be found on this portal, for example, because the providers presented here impress with decades of expertise and ensure the cheapest offers for their customers at no additional cost – even in difficult cases when it comes to getting a loan despite Credit Bureau. The customer voices prove that the transaction is smooth and absolutely fair, there are no hidden costs, and there are no additional claims for obscure fees. It goes without saying that the tie-in deals of dubious intermediaries mentioned above have no business here.

Applying for a loan without Credit Bureau – what should you watch out for?
As already described, it also applies to loans without Credit Bureau that certain requirements must be met. It is not a question of blank loans that are floating in the legal space, but of classic loans and instant loans, whose borrowers are also subject to requirements abroad.

What are the requirements?

  • The applicant must be of legal age and resident in the Federal Republic.
  • Regular income is another requirement.
  • Employees must have an employment contract without termination without a trial period.
  • If a salary assignment (self-employed) is not possible, other collateral must be provided, for example the assignment of a life insurance policy or entry of a land charge.

Credit without Credit Bureau comparison – which conditions are to be compared

Credit without Credit Bureau comparison - which conditions are to be compared

The conditions for a loan without Credit Bureau, analogous to a loan with Credit Bureau information, vary within a range that depends on the economic situation of the applicant. Anyone who agrees to a Credit Bureau query will definitely secure more favorable conditions. It also applies to foreign banks that the price, in this case the interest rate, includes the credit default risk. According to the loan without Credit Bureau test reports, the interest rates are slightly higher than those called in Germany.

A credit without Credit Bureau is not possible without proof of income. However, it does not matter whether it is income from employment, rental income or investment income. The borrowers are not charged any separate fees for the loan, neither by the bank nor by the intermediaries. The most frequently asked loan amounts show that many consumers use a loan without Credit Bureau as a loan “on the side”. The greatest need for Credit Bureau-free liquidity is for loans with a volume of 3500 USD, 5000 USD and 10000 USD.

Which documents have to be submitted?

The documents to be submitted for a loan despite Credit Bureau do not differ from the documents that are also required for a classic installment loan with a bank of the Sparkasse. These include:

  • Proof of salary or pension notification
  • Copy of identity card or passport with confirmation of residence
  • List of personal financial circumstances, if not already done online
  • Account statements for the past few months, depending on the institute
  • Possible declaration of assignment for the salary or other security to be provided

The identity check itself is carried out as part of the Postident procedure. A valid identity card or passport with confirmation of residence is required. A driver’s license is not sufficient because it does not provide information about your current place of residence.

The most requested loans without Credit Bureau in the test

The most requested loans without Credit Bureau in the test

In most cases, a loan without Credit Bureau, apart from mortgage lending, is a classic installment loan, just that the lender does not ask for Credit Bureau. In addition, there is no entry of the loan for this loan. The loan without Credit Bureau test shows that these loans can be used universally.

Instant credit without Credit Bureau

As already stated, the instant loan without Credit Bureau is a loan in which the loan request is processed immediately, in the same way as a quick loan, lightning credit or express credit without Credit Bureau. However, it is up to the borrower how quickly he then sends the required documents back to the bank for the final processing of the instant loan. If these are complete, the instant loan without Credit Bureau is usually paid out within three days.

Car loan without Credit Bureau

The car loan without Credit Bureau serves as an installment loan to finance a vehicle. The advantage, as with all other Credit Bureau-free loans, is that even car owners with poor creditworthiness or despite a Credit Bureau entry can afford a new car without having to forego a certain luxury.

Small loan without Credit Bureau

It doesn’t always have to be a five-digit amount that is needed. On the other hand, financing a new laptop doesn’t necessarily have to have an impact on larger financing. A small loan without Credit Bureau, by the way the most used type of loan, is possible from as little as $ 1,000 without the creditworthiness suffering.

Quick credit, lightning credit and express credit without Credit Bureau

Different providers use different terms for a quick loan without Credit Bureau.Background with this loan variant is the fact that the application is checked immediately and the loan is paid out in the shortest possible time after receipt of the necessary documents at the bank.

Cash credit without Credit Bureau

The cash loan without Credit Bureau payment can be made in two ways. Either a transfer to the borrower’s account takes place or the loan without Credit Bureau is paid out by post in cash. The cash credit ensures that your own bank is treated with absolute discretion and that the transaction is completely unrecognized.

Installment loan without Credit Bureau

An installment loan is generally a loan that has an interest rate that is fixed over the term. The installments remain constant over the term and consist of the repayment on the one hand and the interest on the other. As the term increases, the repayment portion increases.

Installment loans are issued with terms between 12 and 120 months, depending on the provider, the loan amount is between 1,000 and 150,000 USD. With an installment loan without Credit Bureau, the loan amount is limited to 100,000 USD. While with a normal loan, the Credit Bureau scoring is included in the credit check, it has no effect with one without Credit Bureau. The applicant’s creditworthiness is defined solely by the current financial situation.

Is the loan without Credit Bureau really available to everyone?

This question is perfectly justified, since it cannot be answered with a simple “yes”. Banks that lend without Credit Bureau will not do so if the borrower’s liquidity is insufficient to pay the monthly installment. Sufficient means that there must be an attachable income component, even if sufficient other collateral can be provided.

Loan without Credit Bureau for self-employed and freelancers

This group of people can apply for a loan without Credit Bureau, but may have to provide separate collateral, as there is no salary assignment. It has to be said very clearly that the self-employed run the risk of getting a negative Credit Bureau. Getting financing afterwards, for example because you need a new car as a sales representative, turns out to be a thing of the impossibility. An instant loan despite Credit Bureau offers the ideal solution.

Loans without Credit Bureau for unemployed and low earners up to Hartz IV recipients

The restrictions resulting from the acceptance guidelines of the intermediaries presented above mean that low-income earners and the unemployed have no way of obtaining a loan without a Credit Bureau from a reputable intermediary. The freely disposable and garnishable income is too low for low earners, unemployment benefits are not attachable. In this case, a loan request would only be conceivable if above-average protection of the loan was possible.

The following scenario would be fatal: An unemployed person owns property that is used and that is debt-free. He transfers this property to the financial service provider, the loan without Credit Bureau is secured. However, the monthly income is not sufficient to repay the loan. After half a year, the house goes to a forced auction, the borrower has literally lost everything. In certain situations, consumers should simply refrain from entering into debt. For the group of Hartz IV recipients, no loans without Credit Bureau are available from a reputable provider. The reasons apply analogously to the unemployed and low earners.

Loan without Credit Bureau for pensioners

There is an option for pensioners to take out a bad credit. The pension statement fulfills the same task as the income statement for employees, but offers another advantage: If you are a pensioner, you can no longer become unemployed, a credit default risk that does not apply and which may have a positive impact on the interest rate.


Collecting loans – how to use it

The emergency loan as an alternative

The interim loan. In this case, your bank will provide you with a new loan for the repayment of the original loan each year, at the repayment dates. In this way you can make the repayments agreed at the time and still do not have any liquidity problems.

Example: An entrepreneur gets $ 25,000 more in liquid funds and also saves $ 1,625 in interest: Since the borrower followed the advice of a financial advisor, he saves 6.5% pa. Previously, he had to overdraw his current account by $ 25,000 in order to agreed loan repayments, which cost him a total of 13.0% interest, including 4.5% overdraft. Now his bank has granted him a special loan and only charges him 6.5% interest. So he saves $ 1,625 interest per year for every $ 25,000 loan.

In early 2004, the entrepreneur had taken out an ERP loan for $ 250,000. The loan was repayable for 5 years. After that, he had to repay $ 25,000 every six months. As of June 30 and by December 30, 2004, he had already repaid $ 25,000 each. Since his company did not go as well in the short term as he had expected in 2005, he lacks the money for the repayment. The result: his current account is currently overdrawn by around $ 25,000 and he has to pay the bank not only 8.5% pa overdraft interest but also 4.5% pa overdraft commission for the amount above the limit. He calculates that he has additional costs of $ 1,750 per year compared to the ERP interest rate, which is 6.0% pa As the repayment increases, his current account overdraft increases and his burden will continue to increase. He wondered how long the bank would tolerate the overdraft.

In order to fix the amount of liquidity and to finance himself more cheaply, he took advice and immediately spoke to his house bank about a collateral loan. Thanks to his initiative, the bank came to meet him and promised him 50% of the annual repayment. Now he only repays $ 25,000 a year, the remaining $ 25,000 as a new loan. For this, the bank charges him 7.5% pa interest.

The two repayments already made were included in the agreement, so that his house bank credited him back with $ 25,000 in his current account and set up a new loan of this amount. The loan is provided by the bank without repayment until the ERP loan is repaid in full. Only when his company has repaid the ERP loan does the repayment of the collateral loan begin. His “profit”: he takes advantage of the fact that he does not pay back for 5 years in order to accumulate liquidity for the following redemption years. But be careful: from the start, remember not to tie up your free liquidity in fixed or current assets. In this way you avoid difficulties due to the later – and significantly higher – repayment rates.

For you as an entrepreneur, one of the most important tasks is always to ensure secure liquidity first. And it makes a considerable difference for you: Instead of calculating an annual loan of $ 50,000 later with an ERP loan, for example, as shown by the figures from the initial example (initially loan-free loan compared to the calculated repayment for all years) , Important: It is of no use to you if you take out a particularly low-interest loan but are unable to repay it. With a simple rough calculation, you can check to what extent you can actually raise the upcoming repayments.

Your quick calculation to check the ability to service capital

Your quick calculation to check the ability to service capital

Draw up a cash flow calculation by comparing your future profit plus depreciation and addition to long-term provisions with your withdrawals, equity-financed investments and the agreed loan repayments. In this way you can determine whether you can make the necessary repayments or not. Example: A doctor’s office with a gross cash flow of $ 150,000 and a net cash flow of $ 50,000 cannot afford a further $ 50,000 loan repayment due to agreed loan repayments. Cash flow calculation: How to calculate whether you can actually pay the repayment for a new loan. Simply insert the values ​​of your company into the diagram and you will immediately see whether and to what extent you can “afford” another loan.

Based on the practical example, you can see that the company cannot earn the required loan repayment of $ 50,000. If you nevertheless make a repayment agreement in the amount, you will have a liquidity deficit of $ 25,000 per year, which will lead to a higher overdraft facility drawdown. The result: you have a higher interest expense. Your goal: Make sure that you not only have liquidity coverage for your company, but value a liquidity surplus of 10 to 20 percent of the gross cash flow, because only then will you have the necessary liquidity security.

If in doubt: Arrange an early loan of the right amount in good time

Anyone who hopes to be able to make the necessary loan repayment can take precautions and agree on a collateral loan. However, when you apply for public grants, it is best to simply arrange a pooling loan – regardless of whether you need it or not – simply as a liquidity reserve. For example, if you have determined that you can only make a repayment of $ 25,000, but your loan requires twice the repayment, you should talk to your bank about a $ 25,000 annual loan. Your bank can easily accommodate you, because the risk loan does not change the risk situation because it is already in primary liability for public financial assistance.

Your advantages with a collateral loan: You can finance the repayment shares that you have not earned through a new loan on favorable terms, without missing liquidity for your working capital. If you had to make full repayment in the originally agreed amount, you could only do so by making greater use of your current account credit. You might even have to overdraw your account. You would lack credit to finance your current assets, and you would have a higher interest expense in the current account, not to mention any overdraft interest that may arise.

How you plan to avoid emergency loans

How you plan to avoid emergency loans

Always agree the term of your loan according to the economic useful life of the objects financed with it. Use the depreciation as a basis when determining the loan repayments. Check your ability to pay on a net cash flow basis. If you always agree on unscheduled repayments, you can repay your loan in full and reschedule if necessary.

Practical comparison: A loan from the ERP expansion program with and without a collateral loan

You are planning an investment of $ 500,000. Now compare how much it will cost you to finance this with and without a back-up loan in the event of a liquidity shortage. If you can receive a loan from the ERP development program in the amount of $ 500,000 for an eligible investment, then you have the following conditions, for example: loan amount: $ 500,000, interest rate 5.50% pa, payment 100%, term 15 years, 5 Years free of repayment, payment June 30, 2004, repayment semi-annually $ 25,000, repayment beginning December 30, 2009, repayment until June 30, 2019

Interest and repayment plan for a repayment loan of $ 500,000

(Interest rate 5.5% pa, term 15 years, 5 repayment-free start-up years) For reasons of space, the simplified representation only shows the annual values. However, the calculations are based on a six-monthly payment cycle.

That’s how much the ERP loan costs

If you take out and repay the ERP loan on the terms mentioned, you will have to pay a total of $ 281,875 in interest. Let your bank provide you with an interest and repayment plan from which you can see the performance rates due.

What to do if the repayment is too high

If you see from your cash flow calculation that the loan repayment of $ 50,000 per year is too high for your practice and you see that you can only make half of the annual repayment, the best thing to do is to speak directly to yours to ensure liquidity House bank on a special loan.

Cash flow calculation: This is how you can determine whether you really earn your debt service

Simply insert the values ​​of your institution into the diagram and you will immediately see whether you can “afford” another loan.

If you have a liquidity deficit to cover

If you are unable to provide the repayment services and have calculated a liquidity shortfall of $ 25,000, for example, you should negotiate with your bank about a collateral loan in the amount of 50% of the necessary annual repayment of $ 50,000. The bank will probably give you a commitment and take over half of the repayment of the development loan in a collateral loan. For example, you have to pay 7.5% pa interest on the general loan. The repayment of the collateral loan only begins when the mortgage loan has been repaid in full. So you always have to make an unchanged high loan repayment of $ 25,000 annually. First on the building loan, then on the collateral loan. The emergency loan is gradually building up. For every half-year repayment of $ 25,000, your house bank provides you with a collateral loan of $ 12,500. The emergency loan grows to $ 250,000 within 10 years.

Collateral loan: This is how a collateral loan develops if the house bank provides you with half as collateral loan for the originally agreed loan repayment of $ 25,000 every six months:

Interest that you can save on a current account loan over current account financing

Determine how much interest you have to pay on the emergency loan of $ 25,000 annually at 7.5% and compare this effort with a current account interest rate of 9.5%. Do not take into account that you would probably have had to exceed your current account limit even over time, so that the matter would have been even more expensive. They come to the conclusion that the emergency loan would cost you $ 98,435, but a current account loan would cost around $ 124,685 in interest.

Calculation of the different interest expenses for a general loan and a current account credit

Interest rate for the collateral loan 7.5 percent pa, interest rate for the overdraft facility 9.5 percent pa

Interest savings of $ 26,250 through the collateral loan

If you had financed the high repayment of the extended loan through your current account, you would have to pay interest of $ 124,685.00. Due to the “orderly” financing through the collateral loan, you only have to pay $ 98,435.00 and save $ 26,250 in comparison.

Interest and repayment plan for a repayment loan of $ 250,000, interest rate 7.5% pa, term 10 years

The simplified representation shows the annual values ​​for clarity. However, the calculations are based on a six-monthly payment cycle.

The repayment of the collateral loan begins after 15 years

In order for you to retain the liquidity advantage that this construction is to bring you, the repayment of the collateral loan – which has gradually increased – only begins after the full loan has been repaid. If you have your house bank draw up an interest and repayment plan for the repayment phase of the general loan, you can use this to better plan the respective due rates.

The total expenditure for construction and collateral loans

The total expenditure for construction and collateral loans

Calculate the total expenditure for your financing. For the development loan and the subsequent collateral loan, you come to $ 480,977. (Calculation of the total interest expense for an ERP construction loan with subsequent collateral loan)

For your own interest, you can still calculate how high your interest expense would have been if you had also processed the amount of the collateral loan for the repayment phase using a current account credit with 9.5% interest. Have your house bank draw up an interest and repayment plan for it and ask them to use an interest rate of 9.5%.

Interest and repayment plan for the repayment of a current account credit in the manner of a repayment loan

Loan amount $ 250,000; Interest rate 9.5% pa, term 10 years (The simplified representation shows the annual values ​​for better clarity. However, the calculations are based on a six-monthly payment rhythm).

What you should consider when negotiating an emergency loan

Determine the amount of your loan repayments for loans with repayment periods only based on the repayment period and not on the entire term of the loan. Use a cash flow calculation to determine which loan repayment your facility really makes. Measure the amount of your collateral loan so that you do not need an additional current account credit. As a matter of principle, negotiate with your bank about a special loan for public promotional loans, regardless of whether you currently need it or not. Create a liquidity reserve with the collateral loan. If the interest is low, remember to agree on a fixed interest rate for the collateral loan. Try to enforce an unscheduled repayment clause at your bank for the emergency loan too. For the loan term, use the economic useful life of the financial items as a guide.