What happens if I can not pay a mini loan?

Non-payment of a mini loan. What happens, what are the consecutences?

First of all, is to comment something important and that summarizes the whole post:

Not paying a quick credit, it has consequences.

Something that had helped us at first, for needing urgent money, can become a problem of arrears and interest commissions, which add up and continue. Basically it is the same as if we do not pay any other loan or credit, the amount will increase, as the days, weeks… months go by, without paying it. 

Hence, in minicreditosalinstante.com we insist so much on our post, on the need to be clear that we can return the capital on time, and not try to fix a problem by creating a bigger one.

Otherwise, we can see ourselves included in delinquency files, which is what usually happens when we talk about the default of a mini loan. It is not the same, obviously, duty 30,000 euros that 300, the consecutences are not equal, because it will depend on the financial institution decides whether it is worthwhile to claim judicially or not.

Even so, the mere inclusion in a delinquency file is, at least, a real task, when looking for financing. And not only financing, also things as simple as hiring a telephone line, renting a home (and contracting services in it, such as electricity) or any other service / product, where the company consults and decides on these lists of Defaulters, if they want us from clients or reject our request.

If you want to know if you are included in Financial Credit Institutions, we have prepared the articles for you, to know if I am in Financial Credit Institutions and to leave Financial Credit Institutions

Non-payment of a credit in stages

As we have already mentioned throughout this entry devoted to the non-payment of a loan, when we stop paying a loan – like any other type of financial service – we will have to assume a series of consequences, among which more usually we have the progressive increase in debt as the weeks go by.

It is for this reason that before applying for a loan we must take into account that once the term of this has expired, we will have to return it, both the total amount borrowed and the interest.

When we apply for a loan, we must do it with a good organization of our monthly budget, with the assurance that in the future we will be able to face its repayment, thus avoiding incurring in a possible default of a mini credit.

However, it may happen that throughout the return period that we had agreed with the financial, for example Vivus (or any similar entity) weeks ago, there are more unexpected expenses that alter our budget, and prevent us from having enough money to cover all of our pending payments; Situations that can lead us to the non-payment of our microcredit, generating still greater debts.

If we reach this situation of default we will find the following stages:

Stage 1 – Increase of outstanding debt due to late payment

  • The first thing that we will find at the moment we stop paying our credit for the first time is a significant increase in debt, which will be added a series of interests for delay that will vary according to the amount of time that we are delayed in the payment.
  • In most financial institutions we will find fixed fees for non-payment plus a variable percentage that will be added to the total to be returned month by month, thus generating that the amount that we have to pay to pay off our debt becomes bigger and bigger with the passage of days or weeks.

Stage 2 – Claim for payment by judicial means

  • Although each financial institution works differently and manages the non-payment of a mini-loan according to its particular terms and conditions, the most usual thing that we will find once several months have passed since the default (this period can be from third or fourth month) is that we are required to pay our debt through the courts.
  • If after the legal claim of the debt we still can not cope with the payment and respond to what the entity in which we contract our mini credit requires us, it can go as far as the seizure of goods, although this is likely to vary according to the type and amount of loan contracted, as well as our possessions.

Stage – 3 Financial Credit Institutions and other delinquency files

Finally, we find a consequence generated by any type of non-payment: our personal data will become part of lists associated with late payment, such as Financial Credit Institutions.

At the moment in which we stop paying our credit, we will become part of delinquency files. A consequence that will negatively affect our credit history, and that will complicate our future access to other financial products, such as new loans or financing.

These three phases summarize the consequences that we are going to find when we stop paying our loan, since we can not ignore the fact that each financial institution has a different way of managing defaults, so that there is the possibility that there are stages that we have not described here.

Stop paying a loan generates the increase in our debt, as well as our entry into delinquency files as Financial Credit Institutions, so that when we see that we will not be able to meet the payment of our credit within the term we have established with the financial, the best we can do is contact the entity, and communicate our situation so we can request a deferment of payment, reaching an agreement that is beneficial to both parties.

We must also bear in mind that it may happen that, simply, we can not pay for it, it is not that we do not want to.

There the first thing will be to get in touch with the financier and negotiate a form of payment, which comes as close as possible to our possibilities. Because one thing is clear: if you can not, you can not, period.

When we ask for a mini-loan, we often ask ourselves what can happen if we do not manage to pay it off

Something that we never expect to happen and in fact it is usual that it does not, but that is, nevertheless, a possibility that we must take into account. In fact, these types of loans have high interest and costs for delays to protect against high delinquency rates. That is why in this article we will try to explain to you in the clearest and most precise way what can happen in general terms if we stop paying a mini-loan.

First of all, some recommendations to not reach the point of not being able to pay the mini-loan.

First of all we must be clear   that a mini-loan advances money to us, but it’s not like a credit that we can ask for in a bank, which gives us a large amount of money that we could never have available if we did not save for a long time (like, for example, when we bought a home); an amount of money that we can return in many months for months or perhaps years.

It is an amount that is lent to us, but that we will have to repay in about 6 or at most 12 months, so we have to be clear that it is a money that we should be able to gather easily and in a short time.

We must also take into account that in microcredits the percentages of interest are usually high, and even more, that these interests increase a lot if we delay, so it will be very difficult for us to return the amount that they have lent us if we do not comply, that is to say that in cases of default you fall into a vicious circle in which it is better not to enter.

So, as you can see we have to think a lot about the amount to ask and how our monthly payments will be, which, we remind again, should be consistent with the money that we usually have, or every so often.

Now we go with the consequences that will bring us the non-payment of a mini-loan:

The first thing that happens when we leave without paying a single fee is that they will contact us, by phone and / or by e-mail reminding us of the payment. It is also when interest for late payment begins to be applied, which starts at 1% or 3% and goes up as days go by and unpaid installments, although these percentages differ greatly depending on the company. To this can be added a commission for claiming unpaid fees that can be around 25 or 30 euros. Only with this we can have increased our debt by 10% or up to 40%, depending on the cost.

If we leave a second installment pending, it is easy to include us in some list of defaulters as Financial Credit Institutions, which will prevent us from requesting future credits and financing other purchases, with the exception of the credits with Financial Credit Institutions, which certain entities grant. Of course, interest on late payments will continue to rise (they can reach over time up to 100% or more of the amount borrowed, that is twice the money we have requested or more, according to the financial). 

From the third installment that we leave without paying, the legal measures will begin. Once you start with a judicial procedure, the times and consequences will be different depending on the type of loan and the amount we owe.

In the case of a mini loan (about € 300 or € 600), after putting us on the Financial Credit Institutions list, it is not easy for us to be harassed by lawyers, and in fact some sentences have penalized the large interest for delay in some cases.

Of course, there is something that is undoubtedly more annoying for a debtor, in addition to the fact of not being able to ask for any more credit, and are the calls from recovery companies, which constantly claim us the money by calling all the telephone numbers that some way they are connected with us.

Loans without equity

What to do if bad Private credit / credit rating?

When bankers talk about a loan without equity, the loans are mostly real estate or condominium investments. As early as the beginning of the last decade, it was a rule of thumb to contribute at least 20.00% to 30.00% on a property or apartment purchase as equity capital for the planned project. This hurdle has fallen more and more in recent years. The current trend is based entirely on the British and Americans, who have been using full financing for real estate needs for decades.

Introductory overview of the topic of loans without equity

  • Change in bank recruitment to grant a loan without equity
  • Mandatory prerequisites for lending a loan without equity
  • Sample calculations
  • Forms of the loan without equity
  • Possible pitfalls of loans without equity
  • What to do if bad Private credit / credit rating?
  • Current figures and interest rate developments


Introductory overview of the topic of loans without equity

Introductory overview of the topic of loans without equity

Rising rents, extremely low interest rates and rising real estate prices are causing more and more people to want a home and thus created retirement savings. Banks often make it possible for clients who do not have the necessary capital reserves to fulfill this wish. The concept behind loans without equity is simple. The banking institutions extend the entire purchase price, including incidental costs, such as brokerage commissions, to your customers. The customer thus saves his nest egg and comes in parallel quickly to a possible retirement.

Change in bank recruitment to grant a loan without equity

Change in bank recruitment to grant a loan without equity

Looking back at the historical perspective of lending indicators once for about 15-20 years, it can be seen that in the past, full financing would have represented an impossible event in Germany. Any bank in Germany would have picked up and asked for many different collateral, which reduces the lending risk of the bank something. The developments of recent years, however, show a serious change in this banking behavior. This raises only the question why are now full financing, so loans without equity completely in vogue and why the banks have changed your lending indicators?

A point for this willingness to change is certainly the economic constraint of the banks dar. Earlier scored the banking industry still with confidence and personal customer relation due to the bond with the bank consultant, who served the customer for decades of his life. Thus, globalization also found its way into the banking scene. Furthermore, the competitive structure has simply changed. In addition to the foreign banks, which wanted to build up a market in Germany and used the market entry barriers with correspondingly attractive financing offers for the customer acquisition, there were also a number of alternative types of financing, such as online platforms, for private money brokerage.

Numerous other pure Internet banks, which pass on their own cost advantage, due to a much smaller presence apparatus to coworkers on the spot, to their customers in the form of attractive financing elements, simply forced the German banking landscape to its knees and to rethink.

Mandatory prerequisites for lending a loan without equity

Mandatory prerequisites for lending a loan without equity

A sufficiently good credit rating of each customer is also fundamentally required when granting a loan without equity capital. A bad scoring of the information files does not fit into the picture of the German banks in lending.

In principle, customers who have an indefinite and secure employment contract can be considered for the award of a loan without equity capital. The income should be correspondingly high. Similarly, a clarified or intact family situation is a mandatory requirement. A full-funding credit applicant currently in an unfinished divorce will not be able to anticipate a positive decision on lending under these undeclared family circumstances, where the post-divorce payment obligations have yet to be determined.

Furthermore, a comprehensible and plausible calculation of the costs regarding the capital goods is inevitable. Age also plays a role in lending, in principle, young loan applicants in a full financing rather chances to obtain this full financing also, as a continuous and long planning security is assumed, compared to older applicants.

A second person, who secures the loan without equity is also urgently advisable, since banks still have a security drive. 2 People who hedge the loan are in doubt better than one who provides security for the bank. However, it is advisable to each customer in addition to a good calculation of the project, nevertheless, a nest egg, which can be used for unannounced incidental expenses.

Sample calculations

  Credit with equity financing
Financing with 110% variant
purchase price 210 000 euros 210 000 euros 210 000 euros
Required loan amount 150 000 euros 210 000 euros 210 000 euros
equity height 60 000 euros 0 euros 0 euros
fixed interest rate 15 years 15 years 15 years
Initial repayment installment 2 percent 2 percent 2 percent
Borrowing rate pa 2.54 percent 3.54 percent 3.54 percent
Personal loan for the purchase costs 21000 Euro (about 10% of the purchase price)
Interest rate personal loan 5.99% pa
Monthly rate personal loan 177.10 euros
Interest costs Personal loan after 15 years 10 877.47 euros
Rate per month 794.50 euros 969.50 euros 1 146.60 euros
Cost of interest after 15 years 38 635 euros 91 541 euros 103 418.57 euros
After 15 years is residual debt 45 625 euros 127 031 euros 127 031 euros
Total running time until full repayment 20 years 29 years 29 years

The interest rate on financing is significantly more cost-intensive when financing without equity.

For the 100% financing, the customer has to raise about 175.00 € / month more than the equity capital. With the so-called financing with the 110% variant the monthly costs are even with a plus of 352,00 € / month.

Also the interest costs are strongly differentiating. Total maturities are significantly higher than the equity capital loan.

Forms of the loan without equity

There are 2 relevant distinctions for loans without equity. One differentiates between the so-called 100% financing and the 110% financing.

For 100% financing, for example, only the purchase price is financed for a property. The additional costs of the purchase, such as the land transfer tax, is borne by the buyer. In the case of the 110% financing, the purchase price and the purchase costs are also financed by the full financing. The total equity can actually be here at € 0.00.

Possible pitfalls of loans without equity

Possible pitfalls of loans without equity

Customers who wish to settle for equity-free financing see themselves exposed to a higher risk of over-indebtedness in the general comparison. They pay significantly higher interest rates and get worse terms. Banks are compensated for their potential credit default risk accordingly.

In addition to the significantly higher interest rate, longer repayment periods and higher monthly burdens also threaten. The higher monthly charges over significantly longer terms compared to loans with equity must be weighed urgently by the interested party in advance.

What to do if bad Private credit / credit rating?

A bad scoring of the information files, such as the Private credit and a concomitant insufficient credit rating to obtain a loan without equity are knockout indicators. In principle, customers with these requirements must be provided with sufficient collateral, which can certainly be very high. Co-buyers with a very good credit rating and good revenue structures who secure the purchase and stick to the loan amount are decisive.

Another variant is the use of private money brokers or the use of foreign money houses, such as Swiss banks, as the lending is not bound to Private credit information.

Current figures and interest rate developments

In the current phase of low interest rates, it is well worth considering loans without equity to purchase home ownership or the like. Young people in particular, who have not had the time to save their own capital, can start investing in old-age provision very early on.

In recent years, the trend for loans without equity has been well established and enjoys a brisk crowd of children. However, considering the mostly poorer conditions of the banks compared to financing with equity capital must also be considered.