Personal loan: cost trap or way out of the debt spiral?

Planner for January | © /AntonMatyukha

Since the 2008 financial crisis, banks have been subject to far stricter criteria for granting loans; since november 2016, the basel 4 criteria have been the bugbear of the financial sector. Where only a few years ago the manager of a bank branch was allowed to decide freely on the granting of small loans, today the basis is an extensive, complicated set of rules and regulations. Families in particular are negatively affected.

The criteria stipulate that, in the case of a family of four, the family income should also be divided by four, which means that only a quarter of the income is available as the basis for loan repayment – less assumed living costs, moreover. For most, this simply means: not creditworthy. But for families in particular, it is often a matter of survival to get at least short-term credit from their bank. A move, the purchase of a new vehicle or an illness in the family can tear such a deep hole in the finances that it is no longer possible without borrowed money.

Personal loan: does it have to be the house bank?

The answer is quite clear: no. Today, it is possible to apply for and take out a loan with banks where one does not have a checking or. Salary account has. It is even worthwhile to compare conditions and options well with each other and pick out the best offer for individual needs. The house bank does not always offer the possibilities that a borrower would like to have.

Our tip: there are online comparison portals for personal loans. We have looked around and compared conditions with each other. It is important never to reach for dubious, dubious offers. A bank based in germany must comply with the regulations that apply here and offers protection to the borrower, e.G., a bank can offer the borrower a credit line. B. In the form of insurance against unemployment and illness. You can also get an overview of the various conditions on the portals of good providers of personal loans in advance, z. B. At norisbank.

How high can a personal loan be and for whom it is suitable?

Personal loan | © /Ishay Botbol

Personal loans are granted by reputable banks only up to a certain amount, usually the maximum limit is approx. 60.000-70.000 euros. Banks must adhere to these relatively low limits due to the aforementioned basel 4 regulations. Moreover, it is safer for the borrower, since the repayment installments are lower and do not burden the monthly budget excessively.

Personal loans are granted only to workers and employees who have a regular income, not to the self-employed. A fixed monthly amount must be available, which can be counted on to calculate the repayment installments. Applicants must be of age and have been permanently employed for at least six months. Prerequisite is the creditworthiness check; in case of negative creditworthiness there is only the possibility to apply for a so-called fixed-price loan.

How high are the repayment rates and what repayment options are available??

The amount of the repayment installments depends on the one hand on the loan amount and on the other hand on the term of the loan. Loans are usually repaid in a period of between one and eight years. Once a year there is the possibility of a so-called unscheduled repayment, where you can pay back up to 50% of the remaining loan with a bank transfer. Serious providers also grant the possibility of deferments under certain conditions.

In the case of a creditworthiness-independent fixed-rate loan, not only the repayment rate but also the APR are fixed from the outset. This has the advantage for the bank to be able to count on a higher interest rate, but also the borrower has an easier way to calculate his monthly budget exactly.

Our tip: pay attention to the conditions for deferments and unscheduled repayments! A reputable bank will not charge additional fees for such repayment options. We recommend to inform yourself in advance about the "small print". By the way, good providers also do not charge any account management fees or other extra costs.

How quickly can I get my personal loan and what are the interest rates??

Man with tablet | © /Antonio Guillen Fernandez