A new car, the purchase or theRenovation of the houseor simply a little more luxury – these are the most common reasons why consumers in this country take out an installment loan. As with many other things, the same applies here: if you compare offers online, you can save money and time. How to find the right installment loan and what you need to consider when applying – this article explains it.
What is a loan taken out for?
The main reason for an installment loan is when - sometimes unexpectedly - larger purchases arise that the person concerned cannot finance from their current income. Before taking out a loan, however, everyone should think carefully about whether the purchase they want is absolutely necessary or whether a cheaper option can possibly be found. Consumers can also use debt restructuring to repay more expensive loans and thus reduce their interest burden.
Who gets an installment loan?
To apply for a loan, the potential borrower must be of legal age and reside in Germany. The banks also require various forms of security and can check the applicant's Schufa information in this regard. A permanent employment relationship and a regular income definitely have a positive impact on the loan decision. If all of these criteria are met, a loan approval is usually granted quite easily, provided the salary is high enough to make the monthly installments. The situation is different for freelancers, self-employed people and temporary employees. Offers forcheap installment loansis a real challenge for them. For them, online personal loans could be an alternative. However, the interest rates there are often higher than on bank loans.
How high are the interest rates?
Since we have been in a persistently low interest rate environment for a long time, loan interest rates are also at a historically low level. This gives consumers the opportunity to finance larger purchases very cheaply using an installment loan. The two-thirds interest rate can be very helpful for you when comparing banks. This means the majority of applicants will receive this or better interest rate. This allows you to estimate how high the interest rates are for the majority of consumers. If you have particularly good credit, you will also receive a lower interest rate. According to the Bundesbank, consumers recently paid 5.7 percent interest on an installment loan.
How can you increase your chances?
Not everyone who needs a loan has a solid income. What can such people do to still have a chance?Granting a loanto get? The simplest and best solution is to involve a second applicant - called a guarantor. This increases security for the bank and the customer's chance of getting the loan.
Finding the right installment loan: Planning and comparison are the be-all and end-all
Every financial decision requires good planning. If you plan and calculate correctly, you willnew caror a whole step closer to the fancier kitchen. First, make a list of your expected income and expenses and use this information to calculate what loan amount you can afford and at what rates. The bank also plays a big role. The bank decides whether and to what extent you will receive a loan offer based on a variety of personal information. Here too, thorough advice is of great benefit.
What should you consider before applying for a loan?
Before looking for an offer, you should realistically assess how high a monthly payment you can afford. Next, consider how long the repayment should take, and only in the last step do you determine whether you will reach your desired loan amount. If this is not the case, it is better to reconsider the planned purchase and, if necessary, postpone it, rather than putting even more strain on your wallet by extending the term.
How do you find the right installment loan?
The first thing you should do is check your Schufa report for possible incorrect entries. Anyone who obtains this information from their bank advisor should make sure that the query is not formulated as a “credit inquiry” but rather as a “condition query”. Otherwise, Schufa will lower itCredit rating assessmentg automatically if the customer does not take out the requested loan. It can also make sense to use online comparison portals. You also have the advantage that you don't have to visit several bank branches, as this not only costs time but also nerves. Some portals are increasingly advertising so-called residual debt insurance. Get detailed advice on this from a consumption center, as insurance cover can be significantly more expensive and contain many exclusion clauses. Sometimes it is better to offer other security or look for other additional insurance.
If things have to go particularly quickly – the turbo loan
A loan application does not have to take long. What used to take about a week can now be done in just a few minutes. With a turbo loan, all forms are filled out online and signed digitally. You don't have to leave the house to apply for the loan or to send the signed contract. A turbo loan saves a lot of time. Very often it is transferred to the account on the day the application is submitted.
Step by step to get your dream loan – at a glance
- Age of majority, residence in Germany and creditworthiness (creditworthiness).
- Interest rates are currently low and the loan is cheaper than in previous years.
- Compare offers and get detailed advice.
- Take your time when deciding to choose the right installment loan for you.
