Anyone who wants to make a major purchase, such as the purchase of a new car or an extensive trip, must always repatriate money and save the necessary sum together. As an alternative to saving but can also be easily borrowed. Here, the interested parties immediately receive the money needed for the larger purchase and can then pay off the respective amount comparatively easily on monthly installments. For the receipt of the loan only the lending rates must be paid together with the regular installments, which can vary depending on the lender.
The choice of loans that can be used today by individuals or business customers is more than extensive. Although this fact ensures that every interested party can find the right loan for themselves, but the selection is also quickly confusing. For this purpose, there is the so-called credit search. This is the process that can be used to select the appropriate loan for you and your purposes.
Interested parties can take advantage of several options to successfully complete the loan search.
In what way can the credit search be carried out
Probably the easiest way is the comparison over the Internet. Among other things, different free websites for the comparison of the loans can be visited here. For example, a so-called “credit calculator” is offered via these web pages. This is a special program designed to simplify the search for credit. In order to be able to use the loan calculator, it is necessary to give some information about his desired loan. These include the loan amount, the term of the loan and also the purpose.
On the basis of this information, customers will then be shown different loan offers from differentiated lenders. The customers can have each of the offer precisely displayed and read here the premises such as the amount of the interest rate or specifics. Subsequently, the respective credit can be completed, if the prospective customer fulfills the necessary conditions.
A second option for searching for credit is the personal visit of banks or lenders. Here, the customers can get advice directly from a bank employee and clarify all relevant questions about the loans offered. However, it has to be taken into account that sometimes it can take a lot of time and work to get all the banks personally visited to make an extensive comparison. In this way, the selected loan can usually be concluded very conveniently, since the customers can do all the work for the bank employees.
What must be considered in the search for credit
Not just any loan, which could be found over the Internet or even the personal visit of the banks, can also be used by the interested party without further ado. As an example, loans can be named that only serve a particular group of people or a specific purchase. As an example, student loans, car loans or home loans are to name. These loans are only issued to students or can only be used for home or car purchases.
Furthermore, one of the prerequisites is that a credit check (private credit) be carried out at the respective borrower. If this turns out to be negative, it is usually not possible for interested parties to take out a loan. To circumvent this check is for “loans from private individuals”. Over the Internet, there are more and more websites that make it possible to obtain credit from one or more private investors.
These offers can sometimes be adjusted not only the term and the loan amount individually, but sometimes also the accruing interest.
What should you pay attention to?
In addition to the requirements that must be met when concluding the loans, it is still important to note that factors must also be taken into account in the actual search for credit. Particularly important here are the interest rates, which should accordingly be as low as possible. The lower the interest, the cheaper the monthly installments. In addition, it must be noted whether the loan interest rates specified are contractually specified. If this is not the case, it may happen that the respective interest can be subsequently raised by the lender.
Accordingly, borrowers must pay more than first charged. Moreover, such an offer speaks for a dubious offer that should not be accepted.
It is also important to leave enough time to search for credit in order to really be able to compare all the relevant offers that are suitably suitable for the respective purchase. Sometimes, at a later date, better credit offers come to market, which have lower interest rates. In this case, the older loan can be replaced by the new loan, and thus paid cheaper.
In the case of such a replacement, however, it must be specified in the credit agreement that the respective loan can also be paid immediately. If this is not the case, it is necessary to continue to pay the monthly installments, for which the sum should be used by the cheaper credit.
An example calculation when searching for a loan on the Internet or at specialty stores
As already mentioned, the calculation of a loan, the correct details of the desired loan amount, the repayment term and the intended use are required. In this example, a loan with a sum of 10,000 euros is sought for the purchase of a new vehicle.
If the interested parties decide now for a term of just 12 months, the interest rates with values between 2.9 and 4.4 per cent are comparatively small. For this purpose, however, an amount between 846.53 and 853.11 euros per month must be paid depending on the interest rate. The total amount here is 10,237 euros, so that accordingly only 237 euros have to be paid for the interest. Those who can not afford such a high monthly contribution must either adjust the loan amount or extend the repayment term.
For example, if the repayment is made in 72 months instead of 12 months, customers can still expect similar interest rates. Monthly rates are now at 151.54 to 147.38 euros. At this term, the customers have to expect a total amount of 10,611 euros, so calculate the cost of the interest of 611 euros. If an even longer term is chosen, for example, 10 years (120 months), the monthly rate is just 100 euros.
Thus, borrowers pay back to the lender a total of 12,000 euros, with the 2,000 euros for the settlement of interest. However, there are only a few banks that support such a long term with a comparatively small loan of 10,000 euros. In addition, the interest rates in this example calculation between 4.95 and 9.99 percent and thus significantly higher than the average.
With this example, it can be quickly recognized how much the loans can differ if the customer only changes the term by a few months or receives a better interest rate.
What is there to know about the lenders
Anyone who chooses a loan, this has numerous lenders with different offers to choose from. A lender is usually a bank with a branch or a direct bank offering only the products via the internet. However, a lender may also be a private person who offers his own (private) assets as credit. No matter if you are a bank or a private person, you should always make a loan comparison so that the cheapest and best offer can be found.
Of course, if a lender provides an installment loan, a financing loan for a new vehicle, or a sum of money to clean up the home, some guidelines and requirements must be met. The lender wants to hedge in case of non-payment of course, and if necessary for the awarding of a loan collateral from the borrower. Such collateral can be either a building plot or a car. If there is an unsuccessful attempt to claim the open installments, the security (car or property) becomes the property of the lender.
Offers for a loan
Today to keep a precise overview of the individual terms and loan agreements is very difficult. However, the fact that the European Central Bank has cut interest rates again and again in the past offers borrowers the advantage of offering lower interest rates than a few years ago. Even though there are very attractive rates for the borrower, the lender still earns good money by lending.
Even with a low-interest small loan, the lender (depending on the interest rate) still takes a few thousand euros. But not only the borrower has numerous conditions to comply with, even the lender, so the banks, has to adhere to strict guidelines.
Anyone in financial distress will choose a loan. This can be either the house bank, the direct bank or a private person in question. It is best that all three providers get quotes and put them through their paces. Often, behind a loan with attractive interest rates is a very poor offer than a loan with high interest rates.
With additional costs, most of which are hidden in the loan agreement, lenders will benefit from additional revenue. Fees and costs for processing the credit application, special repayments or disbursement are not uncommon. Of course, such unexpected charges from borrowers cause a great annoyance and a lot of dissatisfaction.
The house bank as a lender
A loan from the bank, which has been running the payroll account for countless years and making ongoing payments, is certainly a very good source of credit. The bank probably has the best insight into the financial position of the applicant and with a personal interview can be clarified, which loan offer is even in question.
Credit at an online bank
The advantage of such banks is certainly that the duration of the processing is very short. Normally, an acceptance or cancellation takes place after a few hours and the lender also offers very good and favorable interest rates for a loan.
Credit over a private individual
In recent months, the number of private lenders has increased significantly. Individuals offer a very favorable credit on special pages. Of course, here too a credit agreement is created and some requirements must also be met in order to obtain such a loan. So there are a lot of lenders with different offers. A credit comparison is therefore inevitable.
The role of creditworthiness
A basic requirement for the granting of a loan is the creditworthiness of the eventual borrower. A borrower is creditworthy if, with a very high probability, the borrowed loan is also repaid on time. The higher the creditworthiness, the lower the risk that the loan will not be repaid. The creditworthiness is determined during a credit check. A lender assesses the financial situation of the customer and also informs about the general payment behavior of the person concerned.
This determines the personal and material creditworthiness. And not only private Kreidtnehmer must undergo a credit check. Even companies and even countries are rated according to their ability to pay.
Everyone knows the word credit rating. But what is exactly behind it? The terms creditworthiness and creditworthiness refer to a person’s financial ability to repay a loan taken out. Not only in borrowing the credit rating plays a major role. Even with a contract, which is associated with regular costs, the credit rating plays a crucial role.
A credit check is used to examine the creditworthiness of the borrower, which is one of the basic requirements for various financial transactions.
How is a credit check?
In the case of a credit check, the prospective debtor must provide the bank or its future contracting party with an insight into its financial situation as well as its credit and payment histories. The latter information is usually not requested directly from the Kreidtnehmer, but obtained from a credit agency, which collects all relevant data and summarizes in clear scores or in other rating systems.
The ratings and scores of the credit reporting agencies and of the agencies are in most cases presented as a credit rating index. This value can be used to assess how well the credit rating can be arranged. However, it is not known which values and data are included in the credit rating index. In general, however, a small value is a good and a high value a bad credit.
The information provided by the prospective borrower, or even the borrower, in combination with the information provided by one or more credit reporting agencies, will ultimately determine the grading and at the same time decide whether a business relationship can be entered into or not.
A credit check with a consumer is made when he wants to take out a loan, request a credit card or if he expresses an interest in a rental apartment.
Impact on the search for credit
If you want to conclude an insurance or mobile phone contract, often only information from a credit agency are requested in order to assess the credit rating. However, if you want to take out a loan, the credit check is significantly more extensive, since the banks are legally obliged to do so. This obligation by law is intended to protect both the credit institutions and the borrowers.
If a Kreidtnehmer possesses a positive creditworthiness, it is likely that the Kreidtnehmer really repay the loan without causing payment problems.
For a lending institution to lend to a borrower with a high credit rating with a very low risk of default. Default risk is the probability that a loan will not be repaid and thus the bank loses part or all of the money it lends. Of course, such defaults must be taken into account by the bank.
As a result, potential borrowers with a good credit rating also receive loans on more favorable terms than a borrower with a poorer credit rating. The financing can not be granted even if the default risk of a borrower is too great.
What role does privacy play?
Checking the creditworthiness of a consumer by a bank is always an interference with data protection law. A credit check is only permitted if there is a legitimate interest, because sensitive data on account transactions or also on conclusion of a contract is passed on in the case of a credit inquiry. A legitimate interest exists when a person has signaled an interest in a business. This can be, for example, an order or an application.
If there is already a business relationship between the consumer and a company and this is changing or even a dunning procedure is running, there may be such an interest on the part of the company.