In order to finance major purchases, such as a vehicle, new home furnishings or even real estate, it is often necessary to take out a loan. Even for paying off bills or paying off an overdraft with your own bank, a loan can sometimes be helpful.
After all, there are usually fairly large sums involved that can't be easily financed with saved funds or a current paycheck. Credits exist for a wide variety of applications. As earmarked financing for a car, for a renovation project, respectively, as a specific credit line that can be used at the free disposal of the applicant. In the same way, credit is not only important in the private sphere. Companies also sometimes need loans so that they can invest in new machinery or other fixed assets. To ensure that everything runs smoothly when applying for a loan and that nothing important is forgotten, there are a few basic things to bear in mind. Particularly when it comes to successfully taking out a small loan from a bank or financing institution, there are a number of hurdles to overcome.
The loan application – the way to your own desired amount of money
In addition to the traditional way of borrowing from a bank, a number of other lenders now exist. These companies often specialize in the sale of financial products via the Internet. Loan requests are usually accepted after a standardized review process – or quickly rejected, so that the applicant ends up without the desired funds. Therefore, it is even more important to prepare a loan application very well in order to actually receive the desired amount in the end. There are many parameters that must be taken into account here. For example, it is necessary to submit many documents about personal circumstances and proof of assets. It is therefore best to prepare an individual checklist so that all the relevant details for the application are remembered. Thus one has the security to be well prepared. Only when everything is complete can the loan application be processed and – more importantly – approved.
A checklist – useful for the personal loan application
The first step for the credit checklist can be to think about a few important features to the credit. This would be, for example, things like:
– The desired level of credit
Depending on the intended use, the disbursement amount is of course different. The higher the loan amount, the more costs may be incurred for processing, for example.
– The purpose
Some institutions grant their loans only for certain purposes of use. For example, a bank may offer an installment loan to finance a new vehicle or home renovations. The terms and conditions for this could be tailored to this exact line of credit. A loan for a general purpose, that is, which is not tied to any fixed use and the amount may be spent on any desire, may be subject to higher costs.
– Term of the loan and interest accrued
Of course, the term of a loan can also have an influence on the interest rate to be paid. Financial institutions often highlight their low interest rates as a good deal. However, it is important to remember that a currently low interest rate is a guarantee of a good loan offer, does not always prove to be correct. Often it is the variable interest rate. That is, this is always adjusted from the banking side to the currently prevailing key interest rate level. And this, in turn, is set by the European Central Bank (ECB), so that it is always passed on to the customer in the corresponding amount. Accordingly, a low interest rate valid at the time of application can grow into a higher interest rate during the term of the loan than originally thought. A consideration when applying for a loan is therefore:
– The interest rate
Based on this, the choice of a variable or fixed interest rate at the time of application is. Unlike the aforementioned variable interest rate, a loan with a fixed interest rate is not negotiable or changeable over the life of the loan. This may not seem so attractive at the moment; however, as a borrower you do not have to fear any increase and are virtually independent of the ECB's key interest rate.
In advance, the applicant should also be concerned about possible early repayment options. This could be, for example, a special repayment. This makes it possible to repay the loan early, either in the entire remaining amount, or a partial amount. The advantage of such an agreement: Should the borrower have additional funds available over time, the total credit as well as interest burden can be reduced and the credit period shortened.
Another issue that may also be relevant for a loan application is personal collateral. Credit institutions often grant their loans only if the borrower has appropriate collateral. This is to absorb a possible payment default, for example, in the event of loss of salary or in the worst case – the death of the customer. For this purpose, the following point should be included in the checklist:
– Does the loan offer also include a so-called residual debt insurance? This is offered by many financial service providers and takes over, for example, the continuation of the loan installments in the event of the death of the borrower. Important especially for families; so that the relatives do not get into financial distress due to the installment payment. Accepted in the environment of loan collateral is, among other things, land and real estate ownership or income from rental payments. If you as an applicant for a loan can offer no or only insufficient collateral, it is still possible to obtain a loan. Then, however, often only with worse conditions, which can be reflected, for example, in significantly higher installment payments.
Basic requirements for applying for a loan
Of course, the criteria for applying for a loan vary in detail from institution to institution. The general loan terms and conditions of the individual institutions always contain the most up-to-date information. In the end, every customer wants to apply for a different loan amount and has different requirements in terms of duration, interest and repayment terms. Nevertheless, there are practically a few basic requirements that you can note for your checklist as an applicant. This usually involves the following aspects:
– The applicant must be of legal age
– Personal data (form for a self-disclosure)
– An existing residence in Germany
– A bank account in Germany exists
– Regular income of the applicant
– Sufficient creditworthiness and/or collateral
Not to forget, in case the borrower is not in a salaried employment relationship
– In the case of self-employed applicants or freelancers, the income tax assessment notices for the last three years and an income/expenditure statement. Sometimes this can also be the so-called Betriebswirtschaftliche Auswertung (BWA), which can be prepared by a tax consultant, for example.
If the loan is to be used freely, no purpose needs to be specified in the application. In addition to a salary payment, pension income, rental income, income from self-employment or rental income can also be considered as income or revenue – with the respective proofs. On the expenditure side, the applicant should include the following in his checklist:
– Rental payments including ancillary costs
– Expenses for insurance contracts
– other, already existing credit obligations
– possible alimony payments
For the area of creditworthiness, the credit institutions certainly proceed in different ways. The term refers to the so-called creditworthiness of an applicant. This is usually queried with the help of a credit score from various credit agencies. This can be, for example, the Schufa (Schutzgemeinschaft fur allgemeine Kreditsicherung). The result is sent to the lending institution. This criterion is often used for affirmative lending. However, this has nothing to do with the current account balance from the applicant. The procedure involves the assessment of income and expenses incurred by the borrower. This is to check to what extent a fairly balanced relationship exists here. In addition, the financial service providers use this procedure to calculate how the customer's payment history has looked in the past and will play a role in future creditworthiness assessments.
If the desired credit should be used perhaps for the Umschuldung of a Dispo or other – credit, should be present on the check list information like:
– The respective financial institution with which the loan was concluded
– The account number and bank code of the credit-granting institution
– The credit period
– The appropriate residual amount
– If available – a power of attorney for redemption
The other way to the desired credit – online credit comparisons
Before the actual loan application is made, comparisons of the various offers are of course very useful. In the surrounding field of all financial business activities applies: Not each credit offer contains the same conditions as the offer of the neighboring bank; even if both are even in the same place. In addition to the classic offers of the own house bank, nowadays also special websites for online loan comparisons belong to it. Because – to compare the respective conditions of conventional banking institutions with each other is very time-consuming and costs a lot of time. Appropriate comparison portals can help here. They list the desired offers including term, interest rates, costs and the required documents, or the procedure for the application. Thus it crystallizes fast, which credit offer for the customer is individually most meaningful and well suitable. Comparison portals can also be helpful for the application process. Most portals offer an overview here of which documents are necessary for a successful application. The submission of evidence is feasible with some comparison calculators on the online way. In the case of an online application, a postal service procedure is usually carried out in order to identify the applicant. This requires:
– A currently valid identification document from the applicant
– In the case of several borrowers, for example, also from the spouse, the identity cards of all persons
– A completed Postident coupon
– Signed loan application and documents in a sealed envelope
In addition, it should be noted that even with online portals, the applicant does not necessarily have to do without further advice if questions arise. Many providers provide specially set up chat rooms or contact forms for this purpose. Also the telephone contact with a credit adviser is often made possible. This point, whether actually such a customer service is available at an online loan provider, should also be considered in the checklist.
The credit application – with good preparation to the personal desire credit
A good and intensive preparation is everything. This also applies when applying for a loan. Whether you prefer to consult your own bank, visit several credit institutions and talk to an advisor in person, or favor comparisons via online portals – in any case, a checklist for the application is always very useful. If one has checked off all points there – in the truest sense of the word -, one is on the safe side not to have forgotten any relevant things. Especially for a personal consultation at a bank, this is a great help and should not be underestimated.
In this way, the applicant can respond to questions from the advisor and does not need to be unsettled during the interview. In addition, he can appear confident because he has already familiarized himself in detail with the subject of lending thanks to the checklist. Ultimately, this allows the best for the future borrower to be selected from the large offer. These characteristics apply just as much to the application via other ways than the usual bank loans – such as "crowdfunding offers". Once all the requirements have been met, nothing stands in the way of a quick and uncomplicated disbursement of the desired loan amount. Thus it shows up that with the heeding of a few tips and a thorough preparation, the way to the own credit desire can be fulfilled fast as well as without inquiries.