Furniture loan

One situation in which financing or a loan is very often needed is the establishment of a household. Whether a young person moves out of their parents' home or a young couple wants to continue life together — or simply because a new living room, a new kitchen or individual new pieces of furniture are required. Taking out a furniture loan for a new purchase is relatively easy today, as it counts as a small loan. This small loan can usually be taken out directly with the seller, for example the furniture store. Many people do not earn enough at the beginning and therefore cannot afford new, often not inexpensive furniture. Everyone wants to invite guests and present a nice home.

Finding a suitable furniture loan online

Today, the internet has greatly simplified the search for a suitable furniture loan. It is no longer necessary to go from provider to provider of installment loans and laboriously compare the offers. A few clicks on the internet and you can already pick out the best from the good offers. Comparison portals on the internet are particularly helpful here, but you can also inquire with the individual providers themselves. In some cases, this can result in some savings in interest rates among providers compared to a loan from a branch bank.

As a consumer, it is important to know which interest rates should be compared. A distinction is made between the effective annual interest rate and the nominal interest rate. Both rates are communicated by providers to consumers. The effective annual interest rate is the rate that should be used for comparison. The nominal interest rate only includes the general cost of interest, whereas the effective annual interest rate includes interest and other costs such as processing fees.

A suitable loan is not only cheap; it must also fit the customer's ability to pay. For this reason, it is sensible to be clear about your exact financial situation before taking out a loan. A precise overview of income and expenses helps with this. These data are required anyway for the self-disclosure during the loan application, and it makes sense to prepare them in advance. Many loan sites on the internet also provide a loan calculator. With this you can calculate the monthly burden very precisely. Having an overview of your own creditworthiness is also an advantage when deciding on a suitable monthly installment. The installment should not exceed the consumer's financial means.

One point that should also be considered is a condition such as the loan term. For a furniture loan this should not be set too long, because there should always be a material counterpart. Since furniture has a limited useful life, it makes sense to align the loan accordingly and, if possible, not to choose a term longer than seven years. The loan term is usually determined by the size of the installments. The more that can be paid monthly for the installment, the shorter the term.

Once the decision for a particular provider has been made, the loan application can be submitted. If you have already prepared the self-disclosure in advance, you only need to transfer those details. Each institution wants to know exactly whether repayment of the loan is possible within the specified framework, and the self-disclosure is an important decision-making basis. For this, the proof of income for the last two months must be presented in the original. If the borrower is self-employed, the last two or three years are decisive. They must be proven in the form of a profit and loss statement or the annual financial statements. The data must be further substantiated by the corresponding bank statements. Of course, the lending institution also requires information about existing loans. In addition, a copy of the identity card is required. With these documents the loan should be able to be submitted. Sometimes, however, certain documents may still need to be submitted afterwards. This is usually the case if creditworthiness could not be clearly determined from the documents. Sometimes the income tax card or an additional pay slip is requested. For the lender it is, of course, very important whether the employment contract is temporary or permanent. It is also often requested to provide a certificate confirming the start date.

What to do if the loan was rejected

Although the customer believes they have their finances under control, it can happen that the requested financing is rejected. On closer inquiry, it may turn out that a poor Schufa scoring exists. When someone applies for a loan, they automatically give their bank permission to request income information from Schufa. Schufa is an organization whose task is to collect credit data in order to create a comprehensive picture of customers' creditworthiness. In addition to the name, it records all loans, credit cards and past payment defaults.

If a negative entry exists, lending institutions generally refuse to approve such a loan. A negative entry usually indicates poor creditworthiness. A Schufa entry is generally deleted after three years, unless there are still outstanding claims. For minors, deletion usually occurs immediately after repayment of the outstanding loan amount. Many citizens do not even know that they have an entry with Schufa. If you are unsure, you can request a personal data disclosure. One data inspection per year is free. Those who want access to Schufa's portal must pay a one-time registration fee. If the user finds that some data are incorrect, these are corrected upon request.

Schufa also offers entrepreneurs the so-called score value. This value (between 1 and 100) indicates the probability of a loan default. The lower this value, the higher the probability of a default. However, Schufa does not record all loans. There are loans that are not registered with Schufa and these also do not require a Schufa inquiry. These loans often come from Switzerland and can only be applied for via the internet. Applying for a loan without Schufa is just as uncomplicated as applying for a normal loan. In addition to the identity card, the self-disclosure and proof of income are required, as described above. Other banks do not know about the taking out of such a loan and do not need to be informed.

Using a loan to achieve a higher standard of living

Young couples, but also singles, often cannot avoid taking out a loan if they want to maintain a certain standard of living. Life does not always run along the same lines and sometimes, especially for new purchases, simply more money is available, and other times it is less. Bridging times with slightly less money with financing such as a loan is a perfectly normal process. Taking out a furniture loan from a bank, a furniture store itself or a lending institution is, as shown, completely easy and unproblematic. Provided all the prerequisites are met, which in most cases can be checked quickly, the granting of a furniture loan is unproblematic.