Special situations often require special measures. Especially for people without a regulated income, there can often be financial bottlenecks that can not be overcome by one’s own means.
- Mind. 18 years old
Basically, in the run-up to lending, the applicant’s personal details are first checked by the institution or provider. Thus, the institutions ensure that the awarding of a loan is also legally binding. Purely legally, a loan can only be granted if the applicant is at least eighteen years old and therefore able to work.
- Under 65 years old
But also an age limit is often fixed. For example, loans are normally given only to persons who are at least eighteen years old but not yet sixty-five years old. The reason for this is that hedging the repayment can hardly be guaranteed. Furthermore, in the general data of a borrower is recorded whether his regular residence is located within the Federal Republic.
Just as important as the age of the applicant is his creditworthiness. In terms of creditworthiness, or creditworthiness, the responsible institution checks whether the borrower is later able to repay his installments reliably. Information is regularly obtained from Private credit, the protection association for general credit protection, which provides an overview of current arrears of existing loans and debts as a whole. In addition, such information is used to determine whether the borrower is solvent. Here, the Private credit uses different comparison values to ensure that the applicant can also clear a loan again.
- Financial collateral
In addition, the bank will investigate whether a potential customer has additional financial collateral. These include, for example, real estate or other property values. However, such reinsurance is normally only used if higher loan amounts are to be granted. With lower sums, such information is not obtained, since even information gathering already entails costs.
Opportunities without income
A borrower’s positive credit rating is usually used when he can demonstrate a regular income that is not subject to regular fluctuations. But even for people without regular income, there are different forms of credit.
Even without a regulated income, there are various possibilities that still allow borrowing.
This includes, for example, the guarantee. This means that the claimant includes a third party in his loan agreement, which pays the outstanding installments in case of insolvency. This is often enough for the credit institutions to lend.
- Two borrowers
There is also the option of splitting a loan into two separate parties. In the loan agreement then there are two parties that share the monthly installments and deny jointly. If one of the two parties then becomes insolvent, the other party is obliged to pay the monthly installment alone.
- small loans
Another option for borrowers without regular income is so-called microcredits. These are loans that are significantly limited in their amount. In this case, reputable credit institutions usually only offer loans of up to five thousand euros in order to distribute the installment payment over a reasonable period of time and to ensure repayment. In the case of such a small loan usually also checks, like the protection by regular income or financial reserves, remain untouched.
- Online direct suppliers
Furthermore, loans are nowadays a welcome alternative with so-called online direct sellers. These are predominantly private providers who, as part of a community, lend their private capital as credit. Although these offers are often associated with low requirements, but it is filled with high interest rates.
Borrowers should therefore exercise caution, especially in the area of online providers. Frequently, although loans are offered to low conditions, but interest in overpriced extent. For borrowers in predicament so often results in a debt spiral Private credit entries and collection companies entails. A precise comparison of interest rates should therefore be sought in advance. Likewise, borrowers should check whether the targeted provider is on the so-called “blacklist”. This is a directory that tracks lenders who use invalid methods.
What to do with negative Private credit
Customers with negative entries to Private credit or a lack of creditworthiness, such as in the case of unemployment, are generally denied a loan from German banks.
However, with poor credit ratings or negative Private credit entries, some additional options may be considered.
Deletion of the Private credit entry
For example, customers can obtain regular information on whether and to what extent they have entries about them at Private credit. If negative entries exist, the deletion can be requested in certain cases. For loans that have already been settled, a cancellation can be requested after three years. The same applies to debts in the field of mail order or insurance. Guarantees that have been settled can be deleted immediately after the debt has been settled.
Advice to the consumer center
In addition, customers with poor credit ratings also have the option of obtaining specific advice in a consumer center. Consumer centers in this context often provide suitable financial institutions that can meet the needs of the customer and yet work seriously. Likewise, in such conversations, rules of conduct can be determined, which the customer should take into account in the event of borrowing in order not to get into a debt spiral.
However, it should be borne in mind in particular by borrowers without regular income that a loan is often denied for significant reasons. The financing of monthly installments can only be limited to a minimum, which must be reliably provided.
What is the current situation?
However, for people without income, there could hardly be a better time to borrow than it is currently. Since the interest rate factor plays a crucial role in taking out a loan, it should be kept as low as possible. Currently, the German market economy is in a so-called low-interest phase.
This means that while interest rates on invested and secured capital are extremely low, interest rates on loans also move in a low percentage range.
Nevertheless, when taking out a loan, all forms of possible accrued interest should be taken into account. These primarily include the credit-related interest rates. These can not be quantified as a fixed value, since they are individually based on the creditworthiness of the individual customer and therefore vary greatly.
Equally important is the consideration of the nominal and effective interest rates. The nominal interest rate describes the amount that the borrower has to pay to the bank. It can be described as compensation received by the institution because it takes the risk of a loan and provides the money to the client.
The effective interest rate, or APR, on the other hand, describes the costs that result from a loan. It is usually given as a percentage value.
Note: keep ancillary costs in mind!
When looking for a suitable credit institution, a few other factors should be clarified in addition to the interest rates. For example, the customer should assure himself that, as part of his loan agreement, special repayments are possible at no additional cost and that a corresponding adjustment of the monthly installments can be made. In addition, it should be ensured that the respective institute has suitable customer service. It is important to have a local contact who can advise you on important issues.
Also, a detailed examination of the contractual documents should under no circumstances be disregarded. Especially the unpleasant fine print can often contain unpleasant clauses that oblige the customer to special conditions. In particular, for loans without income should therefore be scrutinized.