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Creditworthiness-dependent loans
Creditworthiness-independent loans
Application, approval and repayment
Many people who want to take out an installment loan are faced with the question of whether they should prefer a creditworthiness-dependent or a creditworthiness-independent loan. For borrowers, an answer to this question is usually not easy to find, because too many and partly very different factors play a role. A creditworthiness-independent loan is also called a fixed-rate loan or fixed-interest loan.
Creditworthiness-dependent loans
A creditworthiness-dependent loan can, among other things, be recognized by the fact that the indication of the effective annual interest rate is given with the addition "from ... %". Here the customer could be sure that they can only benefit from the lowest interest rate if they have a very good or excellent personal creditworthiness. The requirements for this are very high. They can generally only be met if the borrower's Schufa report is impeccable and if there is a secure, almost unterminable employment relationship. This is particularly the case for civil servants or long-term employees in the public sector. All other people whose creditworthiness is good, average or sufficient would have to reckon with significant price surcharges and a comparatively higher interest rate with a creditworthiness-dependent loan. A comparison of loans on the Internet, which should be mandatory before taking out any loan, can provide the necessary clarity. In this context the prospective borrower will find that the general level of interest rates has fallen significantly in recent years. There are various reasons for this. One particularly important factor is likely the fact that not only the interest rates for various investments but also loan interest rates are oriented to the European Central Bank's base rate or the EURIBOR. When these rates are very low, this has corresponding effects on loan rates. If the base rate were to rise again in the foreseeable future, the customer would have to reckon with loans becoming more expensive again, since the interest rate for loans would increase.
Creditworthiness-independent loans
A fixed-rate loan is characterized primarily by the fact that the same nominal interest rate applies to all customers, regardless of how high their income is or how secure their job is. However, German banks will also obtain a Schufa report in this case and it should contain no negative entries. If there are any negative entries, it would generally not be possible to obtain a German fixed-rate loan, but there would still be the chance of being granted a loan without Schufa from abroad. In that case the Schufa report plays no role. However, the question of whether the income is sufficiently high and the job secure is of primary relevance for the loan decision. Anyone interested in a fixed-rate loan without Schufa from abroad could at any time contact a German loan broker, such as Maxda, who will in this context try to find a suitable loan offer for each interested party.
Application, approval and repayment
Once a suitable fixed-rate loan from domestic or foreign lenders has been found, it can be applied for either at a bank branch or online. The latter option has the advantage that the customer is completely independent of the bank's opening hours. The application and the entry of personal data can be done directly from the home PC and only takes a few minutes. As soon as the loan application has been received by the bank, the private loan broker or the private lender, it will be checked within a very short time. In this way it is possible for the customer to receive a preliminary notification very quickly about whether and to what extent their loan application can be approved. If the desired loan amount is not available or appears too high, it would still be possible to achieve loan approval by reducing the loan amount, extending the term, or reducing the monthly repayment instalments. If the fixed-rate loan is to be finally approved and paid out within a few hours or days, the customer would have to submit income and/or asset evidence by post or deliver them personally at a bank branch or to the loan broker. In the first case it would be absolutely necessary for the customer to go to a post office counter with their documents and their identity card or passport. Only when their identity has been clearly established will the documents be sent with an identity confirmation. If, after reviewing all documents, the lender concludes that there are no objections to granting the loan, the customer will receive an appropriate notification and can access their money within a very short time. As with a creditworthiness-dependent loan, all loan conditions must also be recorded in writing in a fixed-rate loan contract. This includes not only the length of the term and the amount of the monthly instalments, but also the dates of the first and last payments. In the vast majority of cases the loan instalment is due on the first day of each calendar month. However, there are also certain exceptions that must also be recorded in writing. The monthly repayment instalment in a fixed-rate loan consists of a portion for principal repayment and a further portion for interest, which remain the same throughout the entire term. Often the customer also has the option to make special repayments at regular intervals or to repay the fixed-rate loan early.
Auto or mortgage loan as a fixed-rate loan
Unless otherwise agreed, a fixed-rate loan is always available for general use. However, the situation is completely different for a loan for a car or a property. Both types of loans may only be used for the intended purpose and never for unrelated purposes. A mortgage loan is always a fixed-rate loan. However, it should be noted that the interest-rate fixation only applies for a certain period and is usually released after several years. Afterwards the customer would have to arrange a suitable follow-up financing. If the current interest rate level is very low, the builder or buyer of a property can benefit from this. If the interest-rate fixation of their current loan is expiring soon, they would have the opportunity to take out a forward loan and secure the currently favourable interest rate for the coming years. Especially in real estate financing it is very important that the nominal interest rates are as low as possible. This is largely because the financing sum is usually in the six-digit euro range. As a result, even minimal differences in interest rates have a significant impact on the total loan amount that the customer ultimately has to repay.