Term Loans – How It Works and Providers

The term “term loan” can be understood as a normal installment loan. This very frequently chosen type of loan offers the opportunity to create financial scope, for example for purchases. The borrower chooses a certain amount here, the repayment is made in monthly installments with a predetermined term. The amount of interest accrued for the entire term is initially added to the loan amount. The rate remains constant during the term. However, borrowers need to know in advance what monthly installments they can afford, so it’s important to be careful and accurate about your financial situation.

Interested parties should compare the offers with each other, because credit institutions often only mention the nominal interest rate. However, the processing costs and other fees must also be added to this interest rate as a percentage. Only the effective interest rate provides information about the exact monthly charges. Each loan calculation must also be compared to the monthly financial scope – that is, the borrower must clarify what is more advantageous for him: a long term and a low monthly repayment or a short term and a higher monthly repayment.

If you want to protect yourself against the problem of unemployment or illness / accident, you are well advised to take out a so-called residual debt insurance. If the specified installment payment can no longer be kept due to such an event, these obligations are assumed by the insurance company.

Advantages and disadvantages of a term loan

Advantages and disadvantages of a term loan

Term interest or installment loans are particularly characterized by their relatively short processing time – provided the applicant has the necessary creditworthiness (solvency). Borrowers should be aware that they can repay the specified installments on time within the specified term. This usually requires consent to the Credit Bureau clause. If the entry is negative, the lending institution has the option to reject an installment loan at any time. The provision of collateral is not absolutely necessary for an installment loan. When inquiring through the bank, one should not be too generous here.

If you conclude a contract with a lending institution, you should make sure that early repayment is possible at any time, so that the installment loan can be prematurely replaced by a one-off final payment at no additional cost. Most credit institutions provide for a period of notice of several months in this case. If the loan repayment is an installment loan, it is common for the lending institution to summarize all different liabilities. This not only reduces the number of installments for the loan, but also the amount.

If the previous lender requested collateral for a loan, this must be transferred when the loan is repaid. This is done almost exclusively as part of a trust contract. Only when the relevant collateral has been transferred to the new bank can the new bank work with the transferred money. If a loan is redeemed because, for example, you want to take advantage of better terms at another bank, a so-called redemption fee is due. With this amount, the loan from the former bank is then repaid in full. The transfer fee not only includes the current residual debt and the interest until the transfer date, but also processing fees, transfer costs for the collateral, any prepayment penalty and the surrender value of the residual debt insurance.

loan comparison

loan comparison

If you are looking for an ordinary installment loan, you can find it using the credit comparison below. Select a bank, enter all the necessary data and in the end not only find out whether this provider can grant you a loan or not. You will also receive a list of which providers can alternatively pay you a loan and on what terms. This service is free and not binding for You.

Beware of credit increases and rescheduling attempts

Beware of credit increases and rescheduling attempts

Some banks offer a seemingly simple solution if the installment can no longer be paid with a current loan agreement and / or additional credit requirements have arisen. The old loan agreement is replaced and a new loan agreement with a higher loan amount is concluded at the same time. Only the bank has won here, but the debt tower is getting bigger for you. This development is particularly drastic when interest rates have risen in the meantime and a credit broker has also been involved.

But regardless of this, “debt restructuring” means a major financial loss. The processing fees are not reimbursed pro rata, so the borrower pays twice. The residual debt insurance of the pre-loan is terminated and only leads to reimbursement of the surrender value. The new insurance contract will be more expensive due to the higher entry age. The disadvantages of a debt rescheduling can lead to a claim for compensation if you have not been expressly pointed out. In these cases too, consumer advice centers are happy to help.

If you can no longer pay the agreed installments for an installment loan, you should definitely speak to the bank. Perhaps she is willing to defer the installments and waive the deferral interest and fees. If you can no longer raise the installment amount, you should negotiate with the bank to reduce the installment amount. This leads to an extension of the term and the loan becomes more expensive overall, but you can fulfill the loan agreement.

Beware of so-called credit brokerage companies

Beware of so-called credit brokerage companies

More and more loan offers catch the eye of citizens from advertising pillars and posters. Many banks undercut each other here, although it is only a low interest rate. In the case of car financing, offers are offered with “zero percent interest”. In many cases this is just the so-called nominal interest. Because fees and additional costs of the loan are not included. If you want to compare loan offers with one another, you should therefore always rely on the “effective annual interest rate”, because this includes all ancillary costs and fees that are due in connection with a loan. Credit institutions were even required by law to only provide this value.

Another point to consider when comparing loans is the so-called loan term. Because the longer the term of a loan, the higher the interest burden that has to be paid in total. The monthly contribution is correspondingly low. On the other hand, if you choose a shorter term, you have to pay a little more per month, but the total interest burden to be paid is significantly lower. It should also be ensured that the selected loan term is also adapted to the life of the property. If this is chosen too long, for example, the vehicle will already end up in the junkyard, even though the loan has not yet been paid off.

As a rescuer in need, some credit brokerage firms are currently presenting themselves to citizens who are in financial difficulties – and are cashing in. The trick: With advertisements in the rainbow press, companies are encouraging consumers who would hardly get a loan from banks and savings banks to report. The representatives of these companies then have the customer sign not only a loan brokerage agreement, but also an “agreement on reimbursement of expenses”. In this way, the customer is asked to pay in any case, regardless of whether he gets a loan or not.

However, the reimbursement of expenses usually includes items for travel expenses, the workload of the field staff, forms and postage, as well as telephone costs and information. The bottom line is that a maximum flat rate of sometimes more than 200 USD is required. Payable immediately, regardless of the success of the placement. The consumer organizations also see the blanket “agreement on reimbursement of expenses” as a trick of the credit intermediaries that this is mainly about collecting flat rates and not about real credit brokerage.

Furthermore, it is assumed that these placement companies also accept unrealistic loan requests in order to then collect additional fees and processing fees. The consumer protection organizations also see this as a violation of the Consumer Credit Act. A flat rate for such facilities is inadmissible, travel expenses and visits by representatives cannot be billed at all. Consumers should under no circumstances sign the relevant loan brokerage agreements.

Beware of foreign loans

Beware of foreign loans

The procurement of debt via banks and savings banks remains critical for many smaller companies. However, sufficient credit lines are required to avoid or avert liquidity bottlenecks. In this situation, cheap loan offers – even if they come from abroad – appear very tempting. However, caution is often neglected. Already the chambers of notaries warn of dubious loan offers from intermediaries who are based abroad. Medium-sized companies that are lured by placement companies such as FMG Foreign Trade Company and Thunderspray Import Export Co. LTD in Gibraltar and Ljubljana are particularly affected.

The offers, which mainly concern commercial financing, are difficult to understand. In many cases, the absence of any economic plausibility cannot even be determined. The reason for this is obvious: you bait with an excellent interest rate of between 3 and 3.2 percent with a term of between ten and twelve years. The payment of the loan amount is also interesting because in most cases it is between 98 and 100 percent. In this way, the loans are made palatable to the entrepreneur, and with success. Because with the advertised conditions, the donors are even better than the public subsidies.

Furthermore, the lender makes the provision of financial resources dependent on collateral. This also normally corresponds to the principles of banks, which generally require 100 percent security for the loan. However, these financing offers require a loan of up to 130 percent. In this way, the loan is completely oversecured. If one compares this oversecurity with the favorable interest rate, there are serious doubts about the economic feasibility.

In order to pretend that the borrower is serious, the entire payment of the loan is processed via a notary’s account. The loan payment is subject to the condition that an owner’s land charge is ordered and assigned to the lender. What many have no idea: Even a mortgage on a foreign creditor means a significantly increased risk. If there are any disruptions in the repayment of the loan, the borrower is bound to enforce possible claims abroad.

The next hurdle arises when all the formalities have been completed with the notary. A check is paid to the lender to meet the requirements of the loan. Such a settlement also does not correspond to the circumstances of reputable lenders. Because here too it is shown time and again that the checks issued by the German banks are not at all cashed. In some cases, the check forms were even stolen. In this way, the borrower not only has problems with the fulfillment, because of the not inconsiderable loan amounts, there are also large amounts of return debits.

However, the borrower also exposes himself to considerable risks if a payment should be made by bank transfer. Because there is no way for the borrower to check whether the lender runs a business in his home country that is also approved. Rather, the whole business is done under time pressure because of its “uniqueness”. If you are not sure whether the borrower has the required permission under Section 32 of the German Banking Act, you should contact the Federal Financial Services Authority (BAFin) in advance. In most cases, this inquiry already shows that the business offered not only lacks the necessary legal basis, but also that the alleged lenders are fraudulent.

In this case, it is no longer a question of providing the loan funds, but rather of the advance payment, which the dubious companies immediately collect. In any case, these funds, which arise from taking out credit and residual debt insurance (so-called early commissions), are broken. Entrepreneurs should therefore not accept such tempting offers, because the inclusion of cheap loan funds also requires thorough research or the necessary commercial diligence.

Beware of unauthorized banking

Beware of unauthorized banking

The granting of loans and loans is part of a bank’s core business. The forms of lending are very different: They range from overdraft facilities with checking accounts to consumer loans for larger purchases and construction finance. The requirements for lending depend on the type of loan as well as on the person of the borrower. The payment for the provision of the funds is also complex. This can range from an increased interest rate (overdraft facility) to commissions (overdrafts) to previous deposits at low interest rates (home loan). Loans are also used fraudulently, in the form of deposit loans or as interest-free and repayment-free loans. The borrower first pays a certain percentage of the desired loan amount as equity to the provider.

The amount paid in advance is intended to generate the repayment of loans and interest through particularly favorable forms of investment, so that allegedly no repayments are incurred if the loan is paid later. The forms of investment are not mentioned, nor are the banks that are supposed to grant the loan. The intermediary finally disappears with the deposit. A special variant of this is credit brokerage, in which a reimbursement of expenses for expenses for estimates, the collection of information, travel expenses, etc. is required in advance. However, credit is mostly not allocated due to excuses, eg due to poor creditworthiness or incorrect self-disclosure.

From the outset, the aim of the intermediaries is to collect the expenses alone. Loans are often offered in newspapers with the help of classified ads. Interested parties need to listen carefully if returns are to be achieved within a short period of time, which make up 70 – 90% of the loan amount. However, the investor must be aware that there is a natural difference between debt and credit interest. If, in addition, the facilities for the advance payments are not disclosed, this is a clear indication of a likely fraudulent provider.

A commonly used variant is to couple a loan with an investment business. The difference in value between the market value of the property and the charges entered in the land register are used as a basis. The amount of the difference in value results in the loan amount, half of which is stated as a loan and half as an investment amount. This should not only keep the loan free of interest and repayments, it should also generate the highest returns for investors. The horse’s foot lies in the high commission. However, the loan is never paid out.

Therefore, beware of confidentiality obligations, often combined with high contractual penalties. Anyone who needs this has something to hide. Never trust any offers that are difficult to understand, just because lawyers, tax advisors or notaries take an apparent guarantee. These often only have the function of passing on the funds and do not have an overview of the matter, if they do not belong to the accomplices anyway. Get references and check them critically, if necessary with the assistance of experienced lawyers or tax advisors. Investing some money for this makes more sense than trying to limit its damage later with a large investment.

Complain about incorrect bookings or dubious debits immediately. Customers can object to debits from their checking accounts even if they were significantly longer than four weeks ago. A lack of reaction to the account statement is not to be regarded as approval (BGH, Az. XI ZR 258/99). The BGH thus contradicted banking practice. These made it clear on the back of the account statements: If you do not contradict the quarterly accounts and therefore all direct debits that have been debited up to that point, approve them.

Beware of so-called decoy offers

Beware of so-called decoy offers

“Mortgage loans are cheaper than ever before!” – The full-bodied promises of many providers are one way or another. In the age of the modern banking industry, not only has things become easier, the current interest rate constellation is at a record-breaking low. Nevertheless: A combination of low interest rates and a low repayment does not only have advantages for building owners. Today’s rates are kept extremely low by the banks, but the loan term is also extended considerably! For this reason, these “special offers” must be warned of so-called decoy offers, as many banks are currently trying to sell construction loans in connection with a life insurance policy to customers who are willing to build. Others, in turn, offer a “special loan program” that is designed to give the customer an interest rate reduction of 0.3 percentage points. What they all have in common is the conclusion of a capital or unit-linked life insurance. The highlight: With the payment from this insurance, the loan should then be repaid at the end of its term.

Since these are so-called combination loans, these programs are only suitable for tax purposes for investors, i.e. people who want to rent their property. These combination loans, on the other hand, are completely unsuitable for home finance. The reason: The low interest rates are all just faked, they do not take into account the contributions for the insurance in any way. This makes these offers significantly more expensive than conventional financing offers. For a bank, the loan specified in the prospectus does not actually cost 3.65 percent, but rather 4.36 percent – with the premiums for life insurance! There is also another problem with the future return on life insurance because it is in any case completely uncertain whether the payment from the insurance will be sufficient to repay the loan. In most cases – as evidenced by past cases – there are credit gaps of more than 30 percent. This is simply due to the low profit sharing, because most insurers have drastically reduced it in recent years.

The investor trap “mortgage loans with variable interest rates” is equally dubious. Many real estate investors take out variable rate mortgage loans. Compared to fixed-rate loans, this always makes sense if the money price that the bank pays for its own loan has probably reached its top and begins to decline. In such cases, the lending banks are obliged to also reduce the conditions for variable loans. However, there are always disputes between investors and financial institutions about the modalities for interest rate adjustments. But as soon as interest rates go up, the institutes do not shake for long and also raise the loan price. However, if interest rates on the money markets fall, banks and savings banks take a long time to adjust. The legal problem in this context is that the loan contracts are often rather vague and therefore no exact adjustment clauses can be derived from them.

Sometimes there are phrases in the loan agreements such as: “Interest rates will be adjusted after development on the money and capital markets. The bank notifies the customer of the change in interest rates in good time. ”But there are now a whole range of different court rulings that keep money houses on the shorter leash when it comes to interest rate adjustments. After that, it is not at all at the discretion of the institutes when they will cut the interest rates. The Dortmund Regional Court ruled (file number: 8 O 559/99) that indistinct contractual clauses violate the General Terms and Conditions Act. Therefore, they are not permitted. Consequence: When and to what extent mortgage loans with variable interest rates can be reduced or made more expensive must be clear from the respective loan contract! A correct financing proposal therefore basically contains all costs and conditions. The following points should be clarified in advance:

  • Up to what amount (in USD and as a percentage of the loan value) does the stated interest apply?
  • Does this amount co-finance a possible discount or does the payout loss have to be financed separately?
  • How much does the subordinated loan, which lies above the lending area of ​​the 1st mortgage, cost more?
  • Are there any processing fees or other costs? Is an appraisal required?
  • From what date are interest payments made and how much?
  • When are the installments due and when are the redemption payments made?
  • Are surcharges charged for partial payments?
  • Has the processing fee been calculated based on the fixed interest period and thus taken into account in the necessary effective interest? Or was the processing fee calculated over the entire term of the financing? In the latter case, the effective interest rate works better, although the entire fee is due immediately.
  • Is the tax savings listed as a relief? What is the financial situation when the benefits expire?
  • With which interest rate is the calculation continued after the fixed interest rate? Under no circumstances should today’s interest rate be taken into account. The effective average interest rate is realistic.
  • Has the creation of personal reserves for purchases and future security been taken into account? Has it been considered that the children will get bigger and more expensive?

Beware of rip-offs: they lure with loans and sell insurance

Beware of rip-offs: they lure with loans and sell insurance

Every year dubious credit brokers turn over at least 150 million USD. Ascending trend. The dubious thing: credit intermediaries in Germany so far only need a business license and no other proof of qualification. This is an open gate for fraudsters and rip-offs of all kinds. However, most credit brokers are not at all interested in a real loan brokerage, they rather want to urge consumers to take out additional products such as insurance, investment funds or silent participation in society. The credit intermediaries themselves are also required to recommend their customers in several letters to conclude additional contracts in addition to a loan agreement (e.g. liability, household contents and accident insurance). However, the courts see this practice as a violation of competition law and prohibit companies from sending such letters. The Stuttgart Regional Court, for example, which prohibited a credit broker from recommending additional products to its customers (Az .: 37 O 30/08).

The procedure for dubious credit intermediaries is always the same: interested parties ask a financial service for information material on a loan without Credit Bureau. Instead of the information material, a placement order with a credit contract immediately follows, followed by a transfer form for $ 105 as an alleged processing fee. Reason: These expenses would arise for the company and would also have to be paid in advance (ie before the actual loan brokerage). The worthless letters are almost always drawn up uniformly:

Anyone who signs the brokerage contract will shortly after receive a postal order with a cash on delivery amount of 127 USD. In no sentence does the company mention that brokerage fees are due in advance. But it is even more curious: Even if no loan is applied for, the companies then charge a fee again – this time for expenses incurred. At the same time, companies are commissioned to collect this money from the alleged “customer”. The law is clearly on the part of the citizens: According to German law, a credit broker is not allowed to collect “expenses” at all if no credit is obtained. Credit intermediaries usually receive a commission from the lending bank, so that the customer does not have to pay anything (directly).

If any costs are raised in advance, it is usually a so-called advance fraud – the customer pays for a worthless stack of paper and never receives a loan. But even “semi-reputable” brokers often try to collect fees if the customer does not want to accept the offer. The legal basis is in § 655 d BGB. According to this, a loan broker for services that are connected with the brokering of a consumer loan contract or evidence of the opportunity to conclude a consumer loan contract, apart from the remuneration pursuant to section 655 c sentence 1, may not agree a fee. However, it can be agreed that necessary expenses incurred by the loan broker are to be reimbursed. What this means is that such an agreement to cover expenses can be made with the customer, but only in the event that these expenses are necessary and have actually arisen. Compensation for an online placement of up to 250 USD is therefore out of place.

 

The call loan: low-interest alternative to the overdraft facility

In today’s fast-paced world, you need money for some purchases. If such a case arises, most of them either use a disposition loan (short overdraft facility) or opt for a standardized installment loan, which is already offered by most specialist stores in addition to the banks. The advantages of an installment loan are that the borrower knows not only the loan term but also the monthly installment amount. In this way you can always calculate optimally. The advantages of the overdraft facility, which is granted with a regular receipt of money in the checking account, lie in the flexibility, because it can be covered quickly with incoming payments. However, the overdraft facility is also the most expensive loan with interest rates between 12 and 15 percent.

However, both overdraft and installment loans can be handled with an on-demand loan (also known as a framework or on-demand loan). It works as follows: The bank grants the customer a certain credit line. This is usually between 5,000 and 25,000 USD. Depending on requirements, the borrower can now use any amount of this. For this, the borrower needs a so-called reference account. The bank transfers the required amount there, and the borrower withdraws this amount from the reference account. The advantage is in particular that a call credit is generally not tied to parallel account management.

Further advantages lie in the fact that the loan is provided on a free basis and the interest accrued is also significantly lower than that of an overdraft facility. This is also shown by our call credit comparison. In addition, this interest only has to be paid for the loan amount actually used. Therefore, an on-demand loan – particularly because of the low interest rates – is also ideal for balancing an existing overdraft facility. However, borrowers should never use both financing options simultaneously. This means that the overdraft facility should not be exhausted in advance and then an on-demand loan should be taken out. The quick way into the debt trap would be too big here.

Call Loans in Comparison

Call Loans in Comparison

With our loan calculator you can compare the interest rates of the call loans of different banks with each other for any loan amount and thus secure the cheapest interest:

An on-demand loan is also indirectly suitable for real estate financing. Anyone who has experience in real estate financing knows that it is difficult to calculate all of the total costs in advance. The costs are always fixed when a construction phase has been completed. Even architects or property developers are not always able to provide 100 percent financing. One or the other item quickly becomes a little more expensive, and it quickly becomes apparent that – for whatever reason – additional work becomes necessary that could not be taken into account beforehand. All factors that can push the price up quickly. The same naturally also applies to unforeseen construction delays or increased material costs. Or you choose the more expensive variant in the sanitary area – after all, you only do it once in a lifetime. The budget is quickly exhausted here – funds that are now missing for other important errands.

Now it makes no sense to set the total costs 20 or 30 percent higher and then take out a mortgage loan. On the one hand, you don’t know in advance how much money is needed at all, and such 130 percent financing would be far too expensive. The call loan is then suitable for this intermediate area. The customer now has the option of concluding a loan contract with his bank – for example over 45,000 USD. The bank makes this loan amount available to the customer free of charge. Account management is also free in most cases. The customer pays interest on this, but only in the amount of the loan that is actually used. If the customer only needs 25,000 USD of the 50,000 USD, he only pays his interest for this amount.

On-demand borrowing thus serves as an important buffer for times when things get really tight. If you need a new washing machine or even a new car, you shouldn’t have to cancel your fixed-term deposit account right away. The individual credit line is measured according to the creditworthiness of the borrower, there is no fixed term. There are no fees for the conclusion or use. The borrower also determines how much money he pays back. As a rule, the banks offer the borrower two alternatives:

  • monthly repayment of the individual credit limit with 1.5 or 2 percent
  • Repayment of the loan amount actually used at 2 percent

This “borrowing on demand” is now also offered by pure direct banks over the Internet. Borrowers (private and business customers) should therefore make use of the option of using an unlimited call credit instead of an expensive overdraft facility for checking accounts. With a call credit, the borrower can deal with suddenly occurring financial burdens in a much more uncomplicated manner and thus remains solvent. In addition, the borrower is not bound by any conditions regarding the use of the loan. So he always has the opportunity to freely decide on the use of his financial resources. Account holders who also frequently overdraw their accounts are cheaper to use on-demand loans.

In addition, this type of loan should only ever be seen as an alternative to overdraft facility and never as an addition; the risk of overdrawing your entire financial framework is too great. Borrowers should therefore only ever choose one of the two options. Anyone who opts for an on-demand loan also has to show budgetary discipline, because the borrower cannot be “forced” to repay his loan. However, this in turn means that the loan should not suddenly be forgotten, rather it can be attributed again on a “voluntary basis”.

Before concluding the contract, the credit contract should be examined in detail. What is important above all is a clear regulation of how the loan should be repaid. This emerges from the so-called redemption provisions. The term and the loan rate play a particularly important role here, because the longer the loan term and the lower the rate, the more expensive the loan will ultimately be. The monthly premium amount of the residual debt insurance, with which the bank protects the customer against death or unemployment, is also important. This is of great importance because exactly this insurance premium is also co-financed through the loan.

Advantages and disadvantages

Advantages and disadvantages

Anyone who has a regular income relationship and only has a short-term need for money can travel with an on-demand loan far more cheaply than would be the case with an overdraft facility. The provision of the loan is also free of charge; the loan itself can always be obtained at low interest rates. The call-off loan is also extremely flexible with regard to repayment. The on-demand loan is not only granted to consumers, but also to freelancers and the self-employed. The bank for the call loan can be chosen freely, whereas the current account can be left with the house bank. The disadvantage of an on-call loan is its variable interest rate. If interest rates rise on the market, the bank passes this on to the customer and the agreed interest rate can increase. As interest rates can rise and fall during the repayment of the loan, this ultimately adds to the confusion of this form of financing.

The installments are also set for a regular loan, and there are also provision costs. Early repayment of the loan is also out of the question, as this usually involves high fees. In the case of a call-off loan, on the other hand, the provision of the loan amount is free of charge, and there are no further fees for account management. The borrower is flexible in his repayment and can also pay it off prematurely – accordingly free of charge. Since the interest on call loans is similar to that on installment loans, the borrower always benefits from low interest rates. After all, almost 50 percent of credit costs can be saved compared to the conventional overdraft facility.

In the case of a call credit, the call for credit is made either by cash payment, by transfer, by standing order, by direct debit or by using an EC card. The interest is charged when the account is closed. Borrowers should contact those banks that do not charge an additional current commission when the call credit is made available in the account! Such a commission is completely unusual! When determining the loan amount, the customer’s creditworthiness and the respective conditions of the bank are also taken into account, as well as the monthly income and the fixed assets of the borrower. With regard to the repayment of the loan debt, the borrower can – depending on the financial situation – pay it partially or in full.

The flexible call credit also offers a further advantage when it comes to building finance. In this area in particular, the total amount of financing is often not due in one go, but partial payments are made depending on the construction progress. If the builder takes out this loan at an earlier point in time than is actually required, the calculation of the interest begins earlier. The builder must pay for all of these costs at an earlier point in time. An on-demand loan can circumvent this negative aspect. This now gives the borrower the option of not having to pay the full amount of the loan right from the start. The borrower can also call up the relevant contributions from his loan whenever the house building companies send him their invoices.

This fact shows how important it is to have a clear understanding of what forms of borrowing there are, how expensive a loan is and, above all, what costs the borrower has to pay each month before signing the contract. If you take this into account, you can differentiate accordingly – between reputable and dubious providers in the industry. Furthermore, even if a bank makes apparently generous offers, you should always make sure that the (additional) monthly charge can always be met over the entire agreed term. And by the way, this rule applies to all types of credit – including online loans, installment loans, personal loans, consumer loans, variable loans or on-demand loans.

 

Apply for Swiss credit – free of charge online

 

How do I apply for a Swiss loan? – The loan application from Germany is almost exclusively possible via credit intermediaries or online via the Internet.

Reputable intermediaries such as receipt credit do not require any upfront costs and only receive a commission if the loan is actually paid out – so you do not take any risks.

A brokerage agreement and an application form must be completed for the loan application.

Loan application only through credit intermediaries

Loan application only through credit intermediaries

In addition to complete address and personal data, the application form also asks for the address of the employer and details of the employment relationship (temporary / permanent, start of employment). Information on net income, existing maintenance obligations, existing liabilities and possible garnishment of wages must also be provided.

The application must be accompanied by the last two original wage slips and the corresponding bank statements, a two-sided copy of the ID card and a copy of the electronic wage tax card or the December wage slip.

You can choose whether the payment is in favor of your checking account or postable. Processing usually takes 10-14 working days. In addition to the application form, an agreement between the borrower and the credit intermediary must be completed – this ensures that the intermediary secures a commission if the loan is successfully brokered.

The credit intermediary receives this from the lending bank – the commission is therefore already included in the later credit installments. If there is no successful mediation, there is no commission – the application itself is always free of charge for consumers.

Recognize Reputable Credit Brokers: Tips for Searching the Internet

It is highly recommended that you submit your Swiss loan application directly to an established and reputable credit broker. Save yourself the search with relevant keywords at Google & Co.: Firstly, you will not receive the loan if you apply directly to one of the banks abroad at any more favorable terms. Secondly, a direct application does not lead to a reduction in the processing time, since the processes between the banks and their main intermediaries are standardized, while individual direct inquiries have to be processed much more laboriously. For example, German brokers check incoming applications for loans without Credit Bureau e.g. B. before forwarding to the banks for plausibility.

Discrete loan application: house bank and Credit Bureau learn nothing

Thirdly – and this is the most important point – when you search for Swiss loans via relevant search engines, you run the risk of getting into dubious providers. These are usually not real brokers, but only interested in preliminary costs or your address data. The dubious providers try to sell you insurance, “financial restructuring” etc., but do not help you in your search for a Credit Bureau-free loan.

Reputable brokers, such as Bon-Kredit, Maxda or Creditolo, either tell you directly on the website or at the latest when you make your first request what requirements are required for the loan application and specify the minimum income and the requirements regarding employment status, etc. You will be informed very quickly of acceptance criteria. No insurance is sold and no fees are charged for inclusion in a database, brokering, postage, etc.

Swiss loans promise discretion – and keep that promise. As part of the application, the bank and intermediaries do not request any information from Credit Bureau or other credit agencies. Borrowing also does not result in a report to “Wiesbaden”. As a result, the house bank will not find out about the new loan – at least if the payment is made in cash by the postman.

In this case, the current monthly installments – the first is usually due in the month after next after payment – should be paid by payment slip. At any bank, you pay cash directly into the foreign bank’s account. The credit installments will then not appear on your bank statements – neither your house bank nor other third parties will find out afterwards that you have applied for a Swiss loan.

Loans over $ 3,500 or $ 5,000

Swiss loans are a market niche: the acceptance criteria differ significantly from those in conventional (German) lending business. The special nature of this niche market limits the options a little: You can choose between loan amounts of $ 3,500 or $ 5,000, the term is in any case 40 months.

Interest and principal as well as all other costs are already included in the installments. The monthly installment is either around $ 105 or $ 150 depending on the loan amount chosen, the effective interest rate is around 11.15% (as of December 2015), roughly at the level of an average overdraft facility.

Swiss loans, like any installment loan, can be canceled early and repaid if necessary. In this case, you have to expect a prepayment penalty for the loan. As a rule, you do not have to take a notice period into account, even if all of the loans do not fall under the requirements of the EU consumer credit directive. B. Liechtenstein and Switzerland are not members of the EU.

Apply for Swiss credit when canceling your account

Apply for Swiss credit when canceling your account

Swiss loans are sometimes drawn out of a tight financial situation – the bank often threatens to terminate an overdrafting current account. If the account is not settled within the set period or until the account is actually deleted, a notification to Credit Bureau is imminent. Foreign loans can help avert such damage.

However, it is important to note that the application for a loan requires a current account – if the account has already been terminated, a new one must first be opened and used as a salary account. You can only apply for a loan once 2-3 new monthly salary payments have been received in the new account. It is therefore advisable to act quickly in the event of a “critical” overdraft.

In principle, Swiss loans can still be applied for if the bank threatens to terminate the account – it usually takes 3-6 weeks from the first reminder to the actual termination. The application process, including payment, is usually completed within 10-14 working days. The threatening account termination does not necessarily have to be specified in the loan application, but the existing overdraft does.

Apply for Swiss credit and delete negative Credit Bureau entries

Apply for Swiss credit and delete negative Credit Bureau entries

If – for whatever reason – there is a negative Credit Bureau entry, you will generally no longer receive any credit from German banks with which you can settle the outstanding claim of the Credit Bureau contract partner. In principle, you should get undisputed negative entries to be dealt with as quickly as possible, since the three-year storage period begins only after the claim has been fully settled: For most facts, Credit Bureau is guided by the general limitation periods of German law.

For some years now, however, shorter storage periods have been in place for some of the newly reported negative characteristics, which can be used in combination with a Swiss loan to be processed quickly. Credit Bureau will immediately delete any entries that have been notified after July 1st, 2012 if the claim amount does not exceed $ 2,000, the claim is not titled and the entire amount reported is paid in full within six weeks.

A Swiss loan can open the door to quick deletion : if the other requirements for an application are met, newly reported negative features do not prevent the granting of credit, as long as these have only been reported to Credit Bureau and not to public directories.

Apply for Swiss credit for the second time

If you have already applied for a Swiss loan in the past and repaid the loan on time, you can expect (limited) preferential treatment when you reapply. Borrowers who are already known can often apply for higher loan amounts than new customers – provided income relationships allow it.

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

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

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?

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 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

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 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

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.