The installment loan is the most common form of consumer credit loan. Usually this can be used with payment for free disposal. Especially larger purchases can not always be financed from the savings. If wishes do not want to wait or your own wallet does not give enough, an installment loan helps easy and convenient.
It extends the financial scope and is usually cheaper than the credit line at the house bank. Depending on the provider, terms can be agreed between 12 and 120 months, with maturities rarely exceeding 84 months. Depending on the credit rating, up to 50,000 euros can be borrowed.
Consumers can borrow money from a lender, usually a bank, through an installment loan. The loan is then repaid in monthly installments for the specified duration. The interest is fixed throughout the term.
The costs of the financing are thus manageable. The terms of the installment loan depend heavily on the creditworthiness of many banks. These include employment, income, existing financial obligations and any collateral or a second borrower.
On the other hand, there is also credit with credit-independent interest, which is identical for all customers. Therefore, it is important to thoroughly compare offers for installment loan before a deal. This is easily possible via various online portals.
To which conditions is the allocation of an installment loan linked?
Successful borrowing has some prerequisites. the allocation of a installment loan is a standardized process for banks. Particular emphasis is placed on sufficient creditworthiness and a regular income.
- Regular income
The age of majority and a residence in Germany are of course also required. Even more important, however, is the proof of a good credit rating and closely linked to a regular income. German banks are obliged by law to thoroughly check the creditworthiness of the customer before granting the loan. The audit involves a household bill to ensure that the creditor can pay the installments over the term.
- business checking
To assess the credit rating, the Private credit is an important basis for decision-making. There, numerous data are stored about consumers and from these scores for creditworthiness determined. The best possible value is 100%. Anyone who has been reminded in the past because of an unpaid mobile bill or if there was a payment default on a loan, receives a negative entry in his Private credit information. With a negative Private credit, it is almost impossible for a German bank to get an installment loan approved.
- Proof of income over at least 2 months
The borrower must provide proof of income to prove that he can bear the installments on a permanent basis. For this, the salary or salary slips of the last months are requested. Individual banks still want to see the account statements of the last one to two months. Employees generally have a simpler credit check. Provided they have a permanent job. People on fixed-term or temporary jobs have a harder time obtaining the loan they want. In addition, the probationary period should already be over.
- Business evaluations for self-employed
For self-employed and freelancers still stricter rules apply at many banks. It looks very closely at the regular revenue, which often fluctuate. Therefore, the banks consider a longer period than employees. Proof is provided by business figures, for example via a profit and loss account.
Sample calculation as a sample
The monthly installment consists of interest and principal. Example of a possible installment loan: With a loan amount of 10,000 euros and a maturity over 48 months, an effect of 3.99 percent is required The borrowing rate is 3.92 percent. The monthly installment for the example is 183.80 euros, so that a total of 11,027.95 euros will be paid back over the term.
If a bank offers credit-linked interest, it must also specify the interest rate that 2/3 of its customers receive.
Which special forms of installment credit are there?
A well-known special form of the installment loan is the car loan. Of course you can finance the car purchase at the dealer. However, a car loan offers the opportunity to bargain with the dealer to negotiate a discount. The car loan can be taken out for the purchase of new and used cars.
In contrast to the normal installment loan, he is not at leisure, but is tied to the purchase of a car. The car serves as collateral for the bank in case of a possible default. The interest on a car loan is usually lower than usual.
What are possible pitfalls?
- Request with Private credit entry
The consumer should, when applying for a loan or a request to learn the personal interest, make sure that the request is neutral. There are two features of the Private credit: the loan request and the condition request. A credit inquiry has a negative effect on the score at the Private credit. Moreover, for third parties, it may look like a loan has been requested but not approved. Conversely, the condition request is neutral and does not have the least impact on scoring. Anyone talking to a bank branch adviser should point out that they are sending the neutral Private credit feature. This is automatically taken into account in most credit comparisons on the Internet. However, it does not hurt, before a request for a comparison, to re-examine the situation.
- Additional costs and insurance
In connection with the lending, banks or credit intermediaries are happy to sell a residual debt or installment insurance as an additional product. These insurances are superfluous in most cases, as they are too expensive and have poor conditions. The insurance contribution is immediately included in the loan amount as a single premium. These costs are not included in the reported effective interest rate, so that the offer looks optically more favorable than it actually is. Thus, the customer pats quickly in the cost trap when he signs the contract without thoroughly examining the numbers. In addition, the conditions are often knitted so that there are no or few benefits in the Enrstfall. Anyone who becomes unemployed will not receive any insurance benefits for the first few months, and only 12 months will be covered.
What to do if your credit rating is poor?
Consumers with a bad credit rating and possibly a negative Private credit face big hurdles if they want to raise installment credit. The search is not hopeless. Those who have problems with their own creditworthiness can resort to alternatives. For one, there is credit without Private credit query, on the other hand, a loan can be obtained from private individuals.
- credit without
Getting a loan without the involvement of Private credit is virtually impossible through a German bank. Offers are available from Switzerland or Liechtenstein. Not all offers are reputable, so you should pay close attention and above all avoid any upfront fees for a credit check. However, there are trustworthy providers who lend a loan without having to check the Private credit. Likewise a disbursed loan is not registered in the Private credit. As a rule, such a loan is limited to smaller sums up to a maximum of 5,000 euros. The accrued interest is higher than for a German bank.
- Credit by private
Another alternative for consumers who have a bad credit rating is a private loan. Portals on the Internet bring together loan seekers and private investors. It is rather possible to obtain money with a weak credit rating than with the banks. If private investors can be convinced of the reason for the loan and the interest rate is attractive to them, the chances of a commitment increase. In addition, the potential risk is spread over several shoulders, since a private investor does not have to lend the entire amount. Anyone who presents himself in a transparent and conclusive manner has a good chance of receiving the loan amount. However, it is very likely to be calculated with an increased borrowing rate.
Current development of interest rates
Borrowing money is cheaper than ever. Interest rates remain at a very low level. The circumstance alone should not, however, mislead anyone into unnecessary borrowing. However, if you have to make an urgent purchase, you will get an installment loan at very favorable conditions.
With a good credit rating, it is currently possible to obtain an effect rate below three percent. Those who prefer to seek the safe side with an interest rate irrespective of personal creditworthiness must count on about 4.50 percent. However, the differences between the providers are still large. Therefore, comparing installment loans before closing helps save money.