Anyone who wants to take out a loan should not only consider how much money they are short of and what loan amount they need, but also which form of loan and what scope the loan or financing should take. The most important types of loans available in Germany or elsewhere in Europe are the instalment loan or consumer loan, the overdraft (Dispokredit), the call loan (also framework loan or line of credit), the car loan and the real estate loan. These loans are often referred to as private loans.
It is important that the borrower always obtains a clear overview of the available offers and compares the different loan types as well as the conditions of the various loans. There are some differences from bank to bank and the consumer can save a lot of money by getting an overview and carrying out a comparison of the loans.
These two types of loans differ only slightly from each other. After the application and approval, the total loan amount is paid out in a single sum and must be repaid by the borrower in fixed monthly instalments over a contractually defined period. The loan agreement also specifies when the repayment of the loan begins, when it ends, and whether special repayments or early full repayment of the loan amount are possible. Anyone looking for a suitable lender should take enough time when choosing and consider not only the offers from local branch banks but also foreign lenders and internet or direct banks. For almost all types of loans it is now possible to submit the loan application online without any problems. The credit check is usually carried out promptly. In addition, all documents that must be presented in original form can be submitted afterwards via the PostIdent procedure. For the payout of the entire amount, which is made within a few days, the customer must provide a checking account. The monthly repayment instalments are also collected from this account. All of the loan types mentioned are available for unrestricted use. For this reason, the private or institutional lender does not require proof of the purpose of use. The amount of the monthly repayment instalment is influenced not only by the loan amount and the term but also by the effective annual interest rate. This includes not only the nominal interest rate but also all costs or fees that arise when the loan is granted and during the term.
Overdraft and line of credit
The overdraft (Dispokredit) is not only one of the most popular but also one of the most frequently requested types of credit. It is closely linked to a checking account and is determined individually for each customer. The credit limit is in a range of roughly two to three times the regular monthly income. Unlike many other types of loans, the overdraft can be used flexibly at any time and repaid just as flexibly. A specific minimum monthly repayment is not required. Although interest rates on an overdraft are generally significantly higher than on an instalment loan, they only have to be paid when the customer actually uses the overdraft facility on the current account. Rapid repayment can significantly reduce the interest. The call loan (Abrufkredit) is one of the less well-known loan types. It works similarly to an overdraft but does not have to be taken out at the same bank where the checking account is held. A very significant advantage of a call loan is that the interest rates are usually considerably cheaper than for an overdraft and often move in a range typical for an instalment or consumer loan. A detailed interest comparison on the internet is also worthwhile here. In this context, attention should also be paid to the other loan conditions and to the question of whether the lenders require a certain minimum repayment that must be repaid after the call loan has been used. If this is the case, the instalment will only move within a minor range.
Car loans
Car loans are one of the few types of loans that are expressly tied to a specific purpose. They may only be used to purchase a new or used car and must not be used for unrelated purposes. While there were initially only a few providers offering car loans, their number has increased significantly in recent years. In addition, the conditions and repayment modalities differ considerably in some cases. A classic car loan, which is still the most commonly granted today, is characterized by a clearly defined term and fixed monthly instalments. A very different arrangement is the car loan with a final instalment, also called balloon or three-way financing. Here, the monthly repayment instalments are very low and the interest rates relatively high. The remaining balance at the end of the term must be repaid in a single sum. If the loan was taken out through a car dealership, there would also be the option of returning the car and thereby settling the remaining instalment. Customers who are not satisfied with this option should arrange refinancing in good time and take out a new car loan. Car loans are offered not only by domestic or foreign credit institutions but also by car dealerships.
Real estate loans
The dream of owning your own home can usually only be realized if, on the one hand, sufficient equity has been saved up and, on the other hand, a suitable construction or real estate loan is found. Depending on whether a condominium is being purchased or a house is to be built, the required loan amount will vary. However, it will always be within a range that includes six-figure euro amounts or even more. For this reason, it is strongly advisable to take time when choosing a suitable construction or real estate loan. Even slight differences in the interest structure or in the other loan conditions can have significant effects on the borrower intending to build or buy and can mean that, in the best case, they have to repay several thousand euros less than would be the case with an only slightly higher interest rate.
Loans without Schufa
Loans without Schufa, which in principle can only be granted abroad, are among the types of loans that are becoming increasingly popular among the German population. There are various reasons for this. Some people can no longer obtain a German instalment loan due to poor creditworthiness or a negative Schufa entry because banks want greater security; others simply do not want their house bank or the Schufa to become aware of the loan. Anyone who wants to obtain a loan without Schufa does not have to go abroad and look for a suitable lender there. It is much easier and more convenient to turn to a German loan broker who specializes in placing foreign loans to German citizens. This gives the borrower greater security. Unlike many other types of loans, a loan without Schufa can also be paid out in cash at the post office. This procedure allows for the highest level of personal discretion. Similar repayment conditions apply for the repayment of the entire loan amount. If the customer wishes, it is usually possible to pay the monthly loan instalments in cash at the post office counter. As with all other loan types, a loan agreement is drawn up for a loan without Schufa in which the repayment modalities are clearly and unambiguously regulated. Anyone who has the desire and the means to repay the loan early could, in many cases, do so without difficulty.