Everything you need to know about “credit” – tips from the pros

We are your competent contact partner for all matters relating to finance and loans. In the following we provide you with helpful and comprehensive information and explain the essential steps – from the credit request, to the credit application, to the successful payment.

  • Which loan is the best for me?
  • What types of credit are there?
  • What do I have to pay particular attention to if I want to take out a loan??
  • What requirements do I have to meet for a successful loan application??

"Credit" originally originating from the Latin language – translates roughly to mean "believe". "Credere" is the Latin word and basically refers to a temporary transfer of cash or other property by a lender, to a borrower. By taking out a loan, the borrower undertakes to repay the loan in the future or to pay another agreed equivalent consideration.

The beginnings of the credit system

The genesis of today's credit system dates back to the year 3000 v. Chr. back. The roots can be found in ancient Greece, more concretely: in ancient Mesopotamia as well as in ancient Rome. The credit system developed slowly and gradually: today is used mainly capital – d.h. Money lent, tangible assets were lent in earlier times, such as z.B. Grain seed to farmers or metal for further processing to craftsmen and workers. Interest was already an issue at that time and was charged on lent things and funds. The loan automatically included the obligation to return it to the giver. The two "main actors of the credit system" emerged: lender and borrower.

Only in the course of the 7. In the mid-nineteenth century, a more advanced credit system form emerged in ancient Greece. Especially in the medieval period and economy, loans were in great demand, because in that time cash was a real scarce commodity! In 1741 it was possible to legally charge interest on loans and as early as 1856 the first modern and progressive banks specializing in loans were established in the city of Hamburg. Already from the year 1970 almost every working citizen had his own current account at a bank for his monthly wage income. From this account was also made any payment transactions. Thus, the banking institutions gained more and more insight into the payment behavior of their customers and also into the respective income situations. The first overdraft facilities were created. The term "credit" was not established until the 19th century. Jhd.

An absolute must for any loan – the protection of the loan

In today's world, you can insure and secure just about anything – including a loan. And to secure this is not only very useful, but an absolute must. And securing the loan is of great advantage for both the lender and the borrower. Due to unforeseen circumstances, it can always happen that you can no longer meet your payment obligations properly and can no longer pay your loan repayments on time. In such a case the sog. "Credit residual debt insurance (KRSV)" a. This protection insurance effectively protects you as a borrower in the event of unemployment or incapacity for work. Also a so-called. death insurance, also called "credit life insurance", is a prerequisite for credit approval and disbursement for some banking institutions. In this way, both parties are effectively protected in the event that, through no fault of your own, you are unable to pay your debts. However, there is a special case for the protection of loans: if you have taken out a life insurance policy, a so-called. "Term life insurance", you do not need credit residual debt insurance anymore. Compared with credit protection incl. Death protection, such a life insurance is the more comprehensive and therefore better alternative, because it reaches far beyond the risk of death.

Furthermore, certain physical collateral can secure a loan. This includes, for example, vehicles, valuables such as z.B. Jewelry, but also savings and securities deposits. Also the assignment of monthly salary payments, can be given as collateral for a loan. To be distinguished from this is the so-called. "Personal security". Behind this is a guarantor, d.h. a third party who steps in and pays the loan installments on your behalf in the event of payment defaults or difficulties.

From the loan application to the loan disbursement – this is how the granting of a loan proceeds in detail

There are always two parties involved in the granting of a loan: on the one hand, the one who wants to take out the loan – the borrower, and on the other hand, the one who grants the loan – the lender. These two designations of the individual business partners are completely self-explanatory and obvious. First and foremost, it is important that the borrower provides all documents – especially all documents concerning income and earning capacity. In addition, a sufficient credit rating, i.e. a creditworthiness is of high importance. Because here the risk can be estimated in advance, whether with the credit repayment with difficulties is to be counted on or whether here, in all probability, everything will take its proper course. An equally important step is the authentication of the borrower. It is important to make sure that the person applying for the loan is actually that person and not someone else acting on their behalf. In modern times, this identification is quite quick and straightforward, for example, through the so-called. Video-Ident procedure. In the further course, the lender and the applicant must agree on the loan conditions and set them down in writing in a loan agreement. Of course, it should be mentioned in this context that interest is added to the approved loan amount. This is the lender's profit, because he thus gets paid back a higher sum than he originally lent. After both parties have signed the loan agreement by mutual consent, the money can be paid out to the borrower. The borrower and the lender do not always have to be a bank and a private person; in addition, there can also be two private persons, companies, enterprises or other credit institutions from the country or abroad.

The credit market – this is the marketplace where funds are traded

You should not think of the credit market as a classic marketplace, because it is neither limited in time nor in place. The financial market, also known as the credit market – is the market in which the financial resources, such as.B. Loans are traded. Here you can find credit institutions that act as borrowers, so to speak: they collect funds and chapter, which they then on-lend. Here are lenders who want to invest chapters and lend money. And, of course, borrowers – those looking for liquid cash and credit – can be found in this marketplace as well. A classic constellation of supply and demand. But on the credit market is also always caution required. In addition to the above-mentioned parties, you will often find loan sharks and other credit brokers, with less serious intentions. They allocate capital with such high interest rates, which are not justified at all and in many cases it does not even come to a loan disbursement. High fees even before disbursement, unnecessary consultations and non-transparent credit contracts form the basis for empty promises. So be careful on this market and check well with whom you want to enter into business relations.

The most popular credit forms at a glance

Depending on what the requested loan will ultimately be used for – also determines the type of credit. There is a wide range of loan forms and types: acceptance loans, annuity loans, construction financing and real estate loans, blank loans or business loans – the range is really wide. Often lenders tie the granting of funds to a certain area of application. This is the case, for example, especially with real estate. Here the disbursed money may actually be used only for the construction or. the renovation of an apartment or house to be used.

Depending on the area in which you want to use the credit, you have the choice between different lenders. An overdraft facility is usually granted, for example, the house bank. Many employers pay out employer loans for their employees. This is fast and uncomplicated and the employee can be helped so quickly in a situation. This also increases employee satisfaction, as well as employee loyalty to the company. Not every loan is suitable for everyone. Therefore, consider in advance for what purpose the funds should and must be used. So you are guaranteed to find the right type of credit and the right contact for your needs and goals.

Avoid mistakes when taking out loans and credit – common pitfalls

If you want to save with a credit tidy interest and costs, you should not accept under any circumstances the first, only available offer of your house bank. Better take your time and inform yourself comprehensively. Even small and supposedly insignificant differences in the interest rate, can be very noticeable over the term of a loan. To inform in detail goes in the today's time comfortably and effortlessly from home and on-line. Do not be afraid to do this – it will certainly save you money, time and nerves in the further processing of the loan.

If you are offered a minimum interest rate for a loan? Then you should become really bright ears, because as is well known, there is nothing for free in life. Mostly hidden behind such an offer are hidden costs or other unacceptable contract conditions. Be therefore attentive and check especially the fine print in the contract. Especially here, you should not overread important information that could have far-reaching consequences. Later you can usually not change or even undo anything here.

Please also pay attention to your desired purpose, because some loans have a definite earmarking. You cannot use a loan taken out to finance a vehicle, for example, for a vacation or other consumer goods. You must prove to the bank that the money has been used for the intended purpose, because in such a case the vehicle, for example, also counts as collateral for the loan. If you violate the lending and employment conditions, you may be required to repay the entire loan amount immediately.

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