The most famous form of loan is the installment loan. An installment loan is used for both financial bottlenecks and long-awaited financing plans. The variations are varied: there are car loans, real estate loans and modernization loans, but also a consumer loan when buying a new TV or the classic cover letter in the pub can be seen as an installment loan.
What is an installment loan?
There is a clear legal basis for an installment loan, which every loan contract must fulfill. First of all, it is about a certain loan amount that is paid out in full at the beginning. Sums between 500 and 100,000 USD are possible. However, this varies from provider to provider and also depends on your credit rating.
Such a loan, as the name suggests, is repaid in repayment installments. These are paid monthly, quarterly or semi-annually. The amount of the installments does not change over the entire term and is specified in the loan agreement. In addition to the installments, you have to pay interest. These are also recorded in the contract and may not change over the duration of the loan term.
An installment loan is repaid in a fixed term. It is contractually negotiated how long you have to return the borrowed money. Usual terms are between 12 and 84 months, sometimes up to 120 months, but these are rather exceptional cases.
With an installment loan, you borrow a certain amount of money, the repayment conditions of which are set in advance. Such a loan initially appears to be rather inflexible, but you also have a good overview of the loan and there are no unexpected costs.
Installment loan requirements
You must be at least 18 years old to apply for an installment loan. Under German law, minors are not allowed to conclude credit agreements. You also need a permanent place of residence in Germany. The further requirements depend in detail on the respective bank. However, there are general similarities.
Basically, banks in Germany are obliged to check your creditworthiness when applying for credit. This is to protect consumers from possible over-indebtedness. In addition, banks naturally have an interest in making secure credit transactions. Credit Bureau is generally used to check creditworthiness. If there are negative entries in your Credit Bureau information, many providers refrain from granting the loan. It is best to check your Credit Bureau yourself beforehand by means of self-disclosure. In this way you can delete unnecessary entries if they are no longer relevant.
You must have a regular income to be able to receive an installment loan. Many banks require a fixed income from an employment relationship. In most cases, assignment of wages or salaries is then agreed as security. It is often more difficult for freelancers and the self-employed to obtain an installment loan. If a bank approves a loan agreement in this case, higher interest rates usually accrue.
What does an installment loan cost?
It depends fundamentally on the interest that accrues. Additional costs are only incurred in exceptional cases or are no longer permitted. Processing fees or similar preliminary costs are now legally prohibited. Should such costs arise with a loan offer, you should keep your distance from it and not get involved with the fees.
The amount of interest can vary widely. You can roughly differentiate between two offer variants:
- Offers dependent on creditworthiness with an interest margin: The interest accruing for you depends on your personal creditworthiness. After the bank has checked your Credit Bureau score and assessed your income, you will receive an individual offer of interest for the desired loan.
- Offers independent of creditworthiness with fixed interest rates: The interest rates are the same for all customers as long as the requirements for the loan are met. Your credit rating therefore has no positive or negative effect on the interest rate offered. It only has to be sufficient for you to be eligible for the loan at all.
Dependent interest rates also vary depending on which group of people and occupations you belong to. As already mentioned, permanent employees usually have an interest rate advantage, while the self-employed have to pay more on average.
In addition to interest, many providers also offer residual debt insurance for installment loans. Make sure that this is not mandatory for the conclusion of the contract. Such insurance should come into force when you are no longer able to pay off the remaining debt of the loan contract due to illness, death or unemployment. This sounds good in theory, but in most cases it is very expensive. In addition, the conditions of application are often very difficult to meet. Normally, residual debt insurance should be avoided.
What else should you watch out for with an installment loan?
The cost of an installment loan is largely determined by the interest. These become more noticeable the longer the term of the loan. To save costs, you should always choose terms that are as short as possible. Logically, this increases the monthly installments accordingly, but the total interest burden is not as strong. As tempting as low installments with a very long term may seem, the loan is much more expensive. If your financial means allow, you should always choose an installment loan with the shortest possible term.
Also check whether a loan offer allows special repayments. This is less often the case for installment loans, but it can happen. Then you have the option to repay the loan amount beyond the specified installments. Since 2010, borrowers can withdraw from a loan agreement at any time and trigger the outstanding balance. Banks can then demand prepayment penalty, but do not have to. The costs for this are prescribed by law:
- For loans with a remaining term of more than 12 months, the costs may not exceed 1% of the remaining balance.
- For loans with a remaining term of less than 12 months, the costs may not exceed 0.5% of the remaining balance.
The costs of early repayment are therefore relatively cheap. If your cash reserves allow it, you should consider swiftly repaying the loan amount. This way you can keep the interest costs as low as possible.
If you already know exactly what you want to use the loan for, you should take out an earmarked installment loan. When financing a new car or property, you often get an interest rate advantage. Some providers are also specialized in such loans and can offer you very good conditions. By linking the loan to a real asset, the bank has additional security. For example, if you have taken out a car loan, the bank can sell the car in case of insolvency to pay the remaining debt.
Installment loan without Credit Bureau
Nobody wants a situation in which one needs an installment loan without Credit Bureau. This is mainly due to the banks, since they mostly do not grant credit to the people who need it most. From the point of view of the credit institution, this is understandable since the credit institutions want to keep the risk of loss as low as possible, but this usually ends up in a relatively hopeless situation for people with a poor credit rating. For an installment loan without Credit Bureau, you usually need an income from a professional activity. In addition, a complete payment history must be proven. The bank also checks these with the help of Credit Bureau.
Those who do poorly at Credit Bureau generally do not receive an installment loan. This can already result from a canceled cell phone contract. Nevertheless, there are still some banks that grant an installment loan even with a negative Credit Bureau entry. This usually applies to self-employed people, housewives or people with poor credit ratings. Credit Bureau is a German institution. The providers of Credit Bureau-free installment loans generally come from other European countries. One of these locations is Liechtenstein, for example. The installment loans without Credit Bureau are processed by intermediaries. The best way to contact these agents is online. The decision about the approval or rejection is made very quickly. Loan seekers should therefore deal very carefully with the product.
The terms of the contract must be studied and personal data should also be entered carefully and as far as possible. Anyone who has already dealt with the topic beforehand and has gathered the documents can save some time. Basically, borrowers are a very competitive clientele, because you can earn good money with loan interest. This applies not only to the particularly simple cases, but also to difficult cases. If you want to apply for an installment loan without Credit Bureau, you should be aware that there are no cheap installment loans without Credit Bureau. A high risk of default increases the interest that the customer has to pay. If you want to improve your creditworthiness a bit, you can use various tools. An installment loan without Credit Bureau is easier to obtain because you have additional security. For this you can name a solvent citizen or take out a credit loss insurance. In addition, there is also the possibility to take out a guarantee insurance. With us you will find all the important information about the reputable providers who grant installment loans even with negative Credit Bureau.
Installment loan with immediate payment
Just when you are not fluent, happens in said after another. The TV breaks or the washing machine gives up. But it can happen that you only want to go on vacation once. You may even need a small 4-digit amount for this. This is no reason to despair, because an installment loan with immediate payment is easily possible. The loan can be applied for quickly and easily. In addition, the money is available in the checking account a short time later, provided the required documents are available in full. It is positive that the installment loan is not earmarked. This means that you can freely dispose of the amount.
The advantages of an installment loan with immediate payment
- From a loan amount of 50 USD
- either long or short terms
- Immediate decision after applying for a loan
- Credit in the account within 44 hours
- Application completed in a few minutes
The instant disbursement loan as an alternative to the expensive overdraft facility. Many people simply open a checking account when they need money. However, caution should be exercised here. In contrast to the permanent use of the overdraft facility, a small installment loan with immediate disbursement incurs significantly lower costs. If you use a credit facility, you quickly lose track of the costs. The instant payout loan is perfect for smaller purchases. You can also reschedule an expensive overdraft. Short-term financial gaps can also be easily closed with such a loan.
Compared to the installment loan from the house bank, the installment loan with immediate payment benefits from particularly unbureaucratic processing, fast processes and particularly good conditions. In addition, the interest rate also depends on the creditworthiness of the installment loan. However, an installment loan in the lower 4-digit range also represents a low risk of loss for the lender. Therefore, installment loans with immediate disbursement are generally available on more favorable terms than installment loans on a larger scale. We work with all relevant financial partners and offer you information on the most important programs in the financial market. In addition, you benefit from a huge range of products and the opportunity to find the right installment loan with immediate payment for your needs.
Information on installment credit from private individuals
the installment loan from private individuals can also be called a personal loan. With this installment loan, you don’t get your money from the bank, but from one or more private individuals. A so-called credit marketplace, such as auxmoney, helps to mediate between the borrower and lender. Primarily, people with a moderate credit rating benefit from such a song marketplace. A moderate credit rating comes about, for example, from a fluctuating revenue situation. A credit marketplace from the Internet not only supports the borrower in the search for a private lender, but also helps with the settlement. The application and payment is not really different from that of a normal bank loan. Of course, investors also benefit from investing in a personal installment loan.
Such an installment loan has good yield prospects that are significantly better than most other forms of investment. The installment loan from private individuals thus represents a win for both sides. Both lenders and borrowers benefit. The installment loan from private is not only granted to private individuals, but also to traders and other self-employed. This is an installment loan for the self-employed from private. In this situation, bank financing is usually rejected if there is a fluctuating revenue situation. A fluctuating revenue situation is only a minor obstacle. In the beginning, this form of financing was used exclusively by private individuals. Hence the name installment loan comes from private to private. If you want to take out such an installment loan from a private person, you basically only have to meet the same requirements that you have to meet with an installment loan at the bank.
- Age of majority: The borrower must be over the age of 18
- No negative entries at Credit Bureau: Negative entries at Credit Bureau come about through credit card misuse, garnishment of arrears or arrest warrants. A late payment of invoices only counts if a judicial order for payment has been initiated.
- Creditworthiness: The credit rating classes A to H ensure that the installment loan is successfully taken out privately.
- Monthly income of at least 1000 USD net
- permanent employment
- Resident in Germany
- Account in Germany
You can inquire about creditworthiness free of charge from Credit Bureau. However, this query can only be carried out free of charge once per year per person.
Installment loan for the self-employed
Nowadays it is extremely difficult for self-employed people to obtain an installment loan. This applies above all to self-employed people who have just started a new company or who own a company that has not been in existence for a long time. These people will generally not receive an installment loan from their house bank. However, there are some providers on the Internet that also offer installment loans for the self-employed.
What do you have to consider
Self-employed and freelancers without collateral and proof of income with a non-apparent income in fluctuating amounts usually receive a credit cancellation. A negative Credit Bureau entry can also lead to rejection. Here the credit institutions are just as strict as with employees in dependent employment. The most common reasons for a self-employed installment loan to be canceled:
- the independence is less than 3 years
- the self-employed do not have enough security
- the overdraft facility is used continuously
- the income is too low
Length of self-employment important when lending
In principle, the self-employed are advised not to take out an installment loan until they have been self-employed for at least 3 years. Usually, the figures generated during this period are sufficient to make a meaningful decision. Based on this data, credit institutions can decide whether an installment loan is granted or not. If you only started a few months or 2 years ago, you will rarely get an installment loan from a bank. So that you can get an installment loan as a self-employed person, you should present some important documents when applying for a loan. This includes:
- Income statement
- Revenue and surplus account
- Proof of income tax
- current bank statements
Most banks have their bank statements for the past 12 months presented, but there are also some special cases in which the bank statements of the past 2 to 3 years are required. Without a valid proof of income, banks generally do not provide installment loans. First of all, the credit institutions check the accuracy of the information on the basis of the submitted documents, whereby a score is determined. This score ultimately decides whether you are granted an installment loan or not. The interest rate is also calculated based on this score. Basically, the better the score, the lower the interest.