Nowadays it is easy to take out a loan on the internet. Thanks to new identification methods, you do not even have to go to the post office to confirm your identity. Of course that does not mean that everyone can get a loan. Here are some things to keep in mind.
Get your financial freedom today via a loan with no credit check
A loan can be applied for at different locations. The classic application is made via a bank. This can be your own house bank, but also a foreign bank, where the customer only completes the loan but does not open his own checking account. In today’s digital age, applying for credit has become increasingly convenient and flexible.
In the past it was still necessary to arrange a personal appointment with a clerk and to get advice first. Subsequently, a wealth of papers were filled in order to ultimately obtain the loan. Of course, this is still the classic way that many people choose.
However, there are now alternatives, There are many forms for online loans with no credit check. With these, the customer saves time when applying for them.
In principle, every adult residing in Germany can apply for a loan from a bank. First of all, it is important to get well informed. Clients have to expect high interest rates from local banks, which vary by region.
Each store sets its own conditions and clauses. This means that an offer can be quite different in Munich than in Berlin.
In general, information about the desired loan amount, the term and the planned use of the sum are always required. Based on these data, the framework conditions can be determined. These include the repayment or the loan installments as well as the annual percentage rate of charge. This varies depending on the provider.
With online banks, customers benefit from lower management fees and costs, as there is no need for advice from service employees. Overview of the account, the credit line and monthly repayment settings can be made via an online account.
How is the loan application processed?
Customers must be of legal age and full legal capacity. The loan application first requires an examination of the identity of the applicant. This is required by law to tackle money laundering and other criminal risks.
Examination of the person
However, the exam can easily be completed by Postident or Videoident. The applicant first receives his personal Postident coupon directly on the website of the provider. This will be downloaded, filled out and signed. For further identification, only a valid identity card is required.
In the PrestidentfRahren the employee of the post office on-site verifies the correctness of the data. This includes name, address and identity card data. He certifies the form. This is the last step of your application.
Many online banks also offer the so-called postident method via video chat. With a working webcam, customers can identify themselves with a mouse click. The procedure is analogous to the postident procedure. At the end of the procedure, the employee sends Swiss Post the documents with the corresponding coupon to the bank.
With the difference that you can do this from the comfort of your own home. The service lines are usually open in the evening. Thus, you are independent of the opening hours of the post.
What role does credit bureau play?
“Credit bureau” means “protection community for general credit protection”. It is a private company that provides information on the creditworthiness of private individuals. In the background, an examination within the framework of credit bureau is carried out for every application based on §18 of the German Banking Act.
A loan leads to long-term payment obligations, so the legislator wants to make sure that the debtor can pay off the installments.
Checking the liquidity
The bank wants to make sure that the customer is also liquid and has no financial difficulties. The payment behavior draws conclusions about the creditworthiness of the customer. So how likely is it that the bills and installments are paid? Are there claims from creditors who have not been complied with?
The credit bureau information should therefore contain no negative entries. Otherwise, the operation of the loan is considered at risk.
The credit rating is divided into so-called scores. These are, so to speak, bank-internal risk classes. This barometer is given in points, but only applies to one area of life. For example, one for car loans, mortgage lending or online orders (consumer loans).
What happens with negative credit bureau entries?
But if it comes to a negative entry, this does not exist forever. There are certain deadlines for how long the information may be stored in your credit bureau registry. For example, these are 3 years for undated repayments, for credit card accounts and for entries in the writ of execution.
For special cases of hardship, which concern the total non-fulfillment of a contract, it is 4 years. Insolvency proceedings remain in the register for 5 years.
Which documents are needed?
The application form requires the fully completed and signed loan application. In addition, the copy of the front and back of the identity card, as well as usually the last income tax assessment.
To assess the financial situation of the consumer, the net salary is requested. From this, the bank deducts the monthly fixed costs, ie rent, telephone and other obligations. The basis for the security of the monthly income is also how secure the job of the applicant is classified. Therefore, some banks require a copy of the employment contract to be informed about the job situation.
The last three salary statements in the original are also relevant. Should there be any additional income from alimony or ancillary work, these must be stated and proven.
Proof of income employees
The consumer must demonstrate sufficient income to pay off the loan. Otherwise, it is often very difficult for these customers to take out a loan from the bank. It quite possible that the account statements of the past three months are requested. This also serves to hedge the bank’s creditworthiness.
Proof of income self-employed
For self-employed apply again special rules. As most of them do not have a regular income, a revenue and surplus invoice or a profit and loss account is normally provided here. Companies (corporate clients) should submit the extract from the commercial register, which provides information about the company, its registered office and the branches.
An evaluation of the earnings situation (business evaluation) and a calculation of the cash flows are also relevant. As a general rule, everything is required as far as the creditworthiness of the consumer is concerned. No matter whether private customer, self-employed person or company.
It is important to pay attention to the timeliness and accuracy of all information, as otherwise the bank reserves the right to terminate existing loans for this reason.
Bank Vs. Online credit vs. Payday loans
The main advantages and disadvantages have already been touched on: The online loan allows you to manage your customer account flexibly from home and at the same time it is associated with low fees and interest. The online bank’s service mask is available 24 hours a day and you can adjust your loan there directly. All you need is your access data.
With a credit of the house bank, however, you have a direct contact person. With this you can always get advice in personal discussions. But even online banks have service hotlines that are available to answer your questions.
Furthermore, some customers value the contact that has existed with your bank adviser for years. Even if all other contracts and insurances run there, many consumers have more confidence in the branch bank.
Take out a loan from a private person
Another form is personal credit, which is granted to private persons to make purchases. However, this is not only granted by the traditional banks but also partly by private individuals. In this case, a certain amount is repaid monthly just like the installment loan. Most of the time, you will be brokered through special credit marketplaces.
Basically, consumers should first compare the respective conditions among the providers. Here are some drastic differences.
An alternative is the setting up of a disposition credit (in short: scheduling credit). This offers the opportunity to override the current account by a certain amount. Thus, it grants a short-term liquidity, which moves in a certain pre-established credit line. Also for this loan, there are interest rates that vary depending on the credit institution. However, unlike the installment credit, they are calculated on a daily basis.
Only for those days on which the customers have overdrawn the account, the interest is actually due. The main difference to the normal installment loan is that it is not paid out at a certain time. At any time, if the customer needs more money, can go into the minus and thus the disposition can be used.
He has no monthly repayment installments. The consumer then pays back if he is able to compensate for it. The amount of the overdraft facility is usually twice or three times the monthly salary.
Caution is advised at very high interest rates. When it becomes a habit to overdraw, the debt trap lurks. Those who really need larger amounts of money in the long term, for example, to finance a vehicle, are always better served with the installment loan.
Common reasons for taking out a loan
Most people will eventually take out a loan during their lifetime. Above all, loans are known for financing houses and cars. The ranking lists events around the topic of house construction, renovation and conversions. But also for the purchase of a new home furnishings loans are an often chosen means. This is also logical, as the private home is usually the center of life, where people spend most of their free time.
The rescheduling is ranked second among the reasons to take out a loan. Since new loans often offer better conditions, it makes sense to reschedule. Disposition loans are particularly often rescheduled.
Furthermore, the topic of motor vehicles has a high priority. Be the subject of personal freedom and independence through mobility or the desire for a new, luxurious car. More than 30 percent of people buy a new car rather than a used car. And since this often involves high costs, a loan offers a convenient solution to pay off the purchase over several years.
Education & Travel
Life goals, such as further education, the study and education of children and play a role. Education and careers are areas for which Germans are eager to spend. They rank fourth in percentage terms, especially for families.
The last big block is recreational activities in the form of travel and vacations. These too require money depending on where and how long, larger sums of money.
In addition, loans are also raised for consumer electronics, weddings and celebrations and, more generally, for liquidity.
What are the terms and interest rate?
Before the conclusion of the loan agreement is the intense concern with the contract terms. Although this sometimes takes a lot of time, it’s worth it. The consumer should not be afraid to obtain sufficient information material. Only then can a really differentiated decision be made.
For many banks, the interest rate depends not only on the term and the chosen credit line, but also on the creditworthiness of the borrower. So banks have a lot of leeway in determining fees and interest. Therefore, a comparison is always worthwhile, even if an offer at first glance seems tempting.
The exact details make up the subtleties, which then decide on several hundred euros interest and other costs.
Different interest types
There are several types of interest between which a distinction is made. On the one hand, there is the nominal interest rate, which determines the annual amount of interest due. It contains no additional costs. The effective interest rate includes all costs incurred, including those directly related to maturity and repayment.
As mentioned above, interest rates on some banks depend on the credit rating, so it is the effective interest rate. It is therefore stated in part in a range that varies as the credit rating improves.
The credit installment, which then has to be paid out, consists partly of one part nominal interest and on the other hand of the fixed repayment.
It should be noted when taking out the loan that the amount should be reasonably calculated. For this purpose, the loan amount should not be chosen higher than necessary. This is logical, because otherwise high costs are caused by the interest.
The rate should be such that it can be paid off without problems every month. In the event of unexpected expenses, there must be enough scope to meet the Bank’s obligations.
Furthermore, a big advantage is the possibility to make special repayments. Because that reduces the customer’s credit burden. These special repayments are not fixed, can be made as if there is more money available. Christmas bonuses, holiday bonuses and subsidies are often used for this purpose.
The sooner the final repayment of the loan is achieved, the less interest the client pays.
Does a residual debt insurance make sense?
Taking out a loan is always associated with risks in terms of eradication. The main issue is what happens when the loan can no longer be serviced. In this case, the insurance company then pays the installment. But this is limited to a certain period of time.
In the criticism, this insurance is mainly in terms of high costs. In most contracts, when the borrower becomes unemployed, only the first twelve months are covered. In addition, a waiting period of six months is added until the first service can be used.
The cost of the policy continues to be relatively high, measured by the actual performance and given conditions. They are due as a single premium, which is then borne on the loan.
The residual debt insurance is only recommended for mortgage loans, so that the family is financially secure in the event of death. Because the obligations from the construction loan are also beyond death. They are then carried by the nearest relatives.
Whether the residual debt insurance makes sense, flat rate can not be answered with yes or no. Consumer advocates agree, however, that the cost of all residual debt insurance in the market is very high and partly unjustified.