Online loans give banks high sales
Banks advertise their products a lot. Online loans in particular are repeatedly advertised intensively on the Internet. This is no coincidence, because banks make good money from lending.
When taking out a loan, you should make sure that you do it reasonably. It is not uncommon for consumers to apply for credit too carelessly and thus get into a debt trap. It makes sense to finance important and long-lasting purchases, such as furniture or household appliances, with a loan; it is rather unwise to use a loan for luxury goods or items that are not really necessary.
Before you apply for an online loan
Before you apply for a loan online, you should try to use all free funds to avoid debt. Some consumers also prefer to borrow money from family or friends. This type of loan often results in lower or no interest.
Banks always grant a loan over a certain term. A term of twelve to 120 months is usually to be agreed for an installment loan. The shorter the loan term, the higher the monthly loan installments to be paid, but the cost of the loan itself is also lower. If the personal financial situation allows it, you should choose a short term to pay off the loan as quickly as possible and thus save costs.
Longer terms equate to higher interest rates
However, many consumers want to avoid high monthly rates and therefore choose a longer term. The monthly installments are then low, but the interest rates are higher and thus the total cost of the loan applied for. A loan can often be redeemed early: for example, through bonus payments or due to some other blessing.
Early repayment is not a problem for loans because loans can be terminated at any time. It may well be that a prepayment penalty has to be paid to the bank, but this is only one percent of the outstanding loan amount. If the loan contract only runs for twelve or less months, only 0.5 percent is incurred. This means that the costs of paying off a loan early are limited. For this reason, it is worth striving for an early redemption because this can often save you relatively high borrowing costs.
Inexpensive online loan – creditworthiness required!
Before a loan is issued by a German bank, the creditworthiness of the borrower must be checked. For this, evidence of a permanent and non-terminated employment relationship as well as a regular and sufficient income are required. In addition, a query of the Credit Bureau data is part of every credit check.
Credit Bureau information is obtained to check how the customer’s past payment history was and whether he can be classified as creditworthy. The better a consumer is at Credit Bureau, the more likely it is that a loan will be granted. Those who have negative entries or characteristics can usually not get a loan from a German bank.
However, it is now possible to get a loan without Credit Bureau. This is a so-called credit without Credit Bureau which is granted by banks abroad. It is now also possible to take out a loan without proof of income.
In any case, it makes sense to check the data in advance at Credit Bureau to see whether all entries are correct. If this is not the case, Credit Bureau is obliged to correct the data. So that the Credit Bureau data are not negatively influenced, it is important when making a loan comparison to only make condition requests to the various banks and not credit requests.