More and more people in Germany are taking advantage of the opportunities offered by modern financing. Not only for larger purchases, such as the construction of a house or the purchase of a new car, loans are now used.
More and more often, it is smaller consumer spending with a value between a few hundred and several thousand euros, which are financed by a loan. For this reason, more and more people are interested in, among other things, where and how they can apply for a loan.
We would therefore like to inform you in the following article about what you need to know about credit and what options currently exist.
Apply for a loan before applying for the loan!
Even before you apply for a loan, you should do a credit comparison. This is not only our urgent recommendation, but almost all experts and consumer protection organizations are of the opinion that the largest possible comparison should be made before you commit yourself specifically to an offer. A credit comparison is no longer a big deal nowadays, because there are online loan calculator available. There you can give some information, such as the amount of the desired loan amount or the term. On this basis, all credit offers can be compared, which are stored in the database of the respective online computer.
For such a credit comparison to be as effective as possible and bring you the desired result, you should pay attention to the following points, among other things:
- If the lender rates interest-based interest rates, only an approximate indication of the interest margin is possible
- There should be at least 15 offers in comparison
- The credit comparison should be free, anonymous and transparent
- Make sure that the loan comparison does not lead to a loan request
We consider the last point to be particularly important, because sometimes the transition from credit comparison to a loan application or to a credit inquiry flow. However, a loan request can have negative consequences, because sometimes this is forwarded to the Private credit. In this respect, it is important that you decide for a good quality loan comparison without any pitfalls.
Request specific conditions
After you have found by means of the loan comparison, the offer that suits you and is as cheap as possible, it is now up to the loan application. Previously, however, you should ask the lender for the sake of security, the current and specifically applicable conditions for you. Such a request is necessary, above all, if it concerns a creditor-dependent lending rate. In this case, you could only deduct an interest margin from the credit comparison, but you do not know what interest rate the lender will actually charge you. But even with such offers, which contain interest-rate-independent interest rates, it is quite advisable to confirm the current conditions once again. Some loan calculators contain outdated interest conditions, so that you can use the request to ensure that the interest rates you know are still valid.
Make a loan application: online or at the office?
If you have decided on a concrete loan offer, there are often two options regarding the further course of action. On the one hand, you can make the loan application personally in the office of the bank if the bank has branches and there is at least one office in your area. On the other hand, more and more credit offers are now being made available online so that you can apply via the Internet. If you do not have a detailed need for advice on the loan, we recommend the second option, so the application of the loan application on the website of the respective bank. One of the advantages is that online loans are usually cheaper than loans that you can apply for at the office. In addition, the entire application process on the Internet is independent of any opening hours, but you can ask the loan request or loan application at any time.
Make a loan request and obtain a concrete loan offer
If you have decided to put the loan request online and obtain the loan offer through the bank’s website, this process usually takes only a few minutes. Depending on the provider, you must provide the following information, among other things, when it comes to receiving from the selected bank a concrete loan offer including interest rate:
- First and Last Name
- Currently practiced profession and employer
- Date of birth
- marital status
- Contact details (telephone number, e-mail address)
- loan amount
- running time
- Purpose of the loan
- Income and expenditure
- Existing loan installments
- Agreement to obtain a Private credit information
With all this information, you should make sure that the data is current and, of course, truthful. As a rule, you can collect all the data online and send it directly to the lender after checking it.
Wait for credit decision of the lender
Once you’ve reviewed all the details and sent them to your bank, it usually takes a maximum of 24 hours before you get a credit decision. Some banks even deliberately offer an instant loan, which will give you a decision after a few minutes on whether to approve or reject the loan you have applied for. Mostly then a credit scoring system is used, which automatically reaches a decision. If the credit decision by the bank turns out to be positive, nothing more stands in the way of the further application procedure. However, if you receive a refusal, in most cases you will have no choice but to look for a different loan offer. However, in the last section, we will give you some information on how you can sometimes “change your mind”.
Check loan agreements, sign and send to the bank
After receiving a loan commitment from the bank and accepting the offer, the lender will normally send you the completed loan agreements by post within a few days. The contracts should then be rechecked for the correctness of the information and then signed. After this is done, you can send the signed loan agreements back to the lender. Whether or not this has to be combined with a postident procedure depends primarily on which option of legitimacy the respective bank provides.
Use Postident procedures or legitimize them online?
Until a few years ago, the so-called postident procedure was still considered the most modern method of legitimizing itself to the bank. In the meantime, however, the Postident procedure is more and more often considered obsolete and too time-consuming, as more and more credit institutions offer the so-called Videoident or Webident procedure as an alternative. While you always have to visit a post office to legitimize yourself in the Postident process, you can use the web or videoident process to authenticate yourself online.
In our opinion, online legitimacy is not only more convenient, but also more time-saving. You do not have to choose a post office, but usually just hold your ID card in the camera (webcam) once. This happens after you have established a connection with the lender’s responsible employee. Thus, there is a direct webcam connection between you and the lender for a short time in online legitimacy. This procedure usually takes less than three minutes and will become increasingly common in the future against the Postident procedure.
Payment of the desired loan amount
Once you have signed the loan agreement and sent it to your bank, which has checked it again and the necessary legitimation has been carried out, the bank will instruct the requested loan amount. Loan repayment is no longer in cash these days, unless you have made a conscious decision to apply for a loan at the office and that you would like to have cash. In most cases, however, the loan amount will be transferred to your checking account as a transfer. It usually only takes a few business days for you to have the loan amount in your checking account.
Negative credit decision: what options exist?
In most cases, you will receive a favorable decision from the bank on your loan application. However, it can happen that the lender informs you that they have to decline your loan application. This is especially the case if you either have a negative entry in the Private credit or your income is insufficient in the opinion of the lender to ensure a stable repayment of the agreed loan installment.
Especially in the latter case, you should consider whether any of the following could cause the bank to change its decision and still approve the loan:
- Reduce monthly expenses
- Choose longer term and thus lower credit rate
- Provide collateral, such as a guarantor
In some cases, the bank may refrain from rejecting the application and approve the loan. If this is not the case, you do not have to revoke the loan because no legally valid credit agreement has been concluded. In the case of a positive credit decision and after the loan has been transferred to your account, your task in the following months and years is only to properly pay the agreed installments to the lender. To this end, it is useful to either give the Bank a direct debit mandate or set up a standing order for the credit installments, since their amount is normally identical every month.