In order to finance larger purchases, such as a vehicle, the new home furnishings or even a property, it is often necessary to take out a loan. Also, for paying off bills or repaying an overdraft at the home bank, a loan can sometimes be helpful.
After all, there are usually quite large sums in the game that can not be easily financed with saved funds or an ongoing salary payment. There are loans for a wide variety of applications. As purposeful financing for a car, for a renovation measure, or as a specific credit line that can be used at the free disposal of the applicant. Similarly, a loan is not only important in the private sphere. Also, companies sometimes require loans to invest in new machinery or other assets. In order for a loan application to be completed without complications and nothing important to be forgotten, there are some basic things to keep in mind. Especially when it comes to taking on a small loan successfully with a bank or a financial institution, there are some hurdles to be overcome.
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In addition to the traditional way to take out a loan from a bank, there are now a number of other lenders. They often specialize in selling financial products like cash advance direct lenders via the Internet, click here to contact. Loan requests are usually accepted through a standardized review process – or quickly denied, leaving the requester without the required funds at the end. Therefore, it is all the more important to prepare a loan application very well in order to actually receive the desired sum in the end. There are many requirements that must be taken into consideration. For example, it is necessary to submit many documents about personal circumstances and assets. It is, therefore, best to make an individual checklist so that all relevant information for the application is thought. So you have the security of being well prepared. Only at the time when everything is complete, the loan application can be processed and – more importantly, approved.
A checklist – useful for the loan application
The first step for the credit checklist may be to think about a few important features about the loan. That would be things like:
– The desired loan amount
Depending on the intended use, the payout amount is of course different. For example, the higher the loan amount, the more costs you can incur for processing.
– The purpose of usage
Some institutions only lend their loans for specific uses. So it may be that a bank offers an installment loan for the financing of a new vehicle or the renovation of the home. The conditions for this could be exactly tailored to this line of credit. A loan for a general purpose, that is, which is not tied to a fixed commitment and the amount may be spent for each request, may be charged with higher costs.
– Term of the loan and accrued interest
Of course, the term of a loan can also influence the interest rate to be paid. Often financial institutions emphasize their low-interest rates as a good offer. However, the following should be borne in mind: The fact that a currently low-interest rate is a guarantee for a good credit offer does not always prove to be correct. Often it is the variable interest rate. This means that it is always adjusted by the banks to the currently prevailing interest rate level. And this is in turn given by the European Central Bank (ECB), so that it is always passed on to the customer in the appropriate amount. Accordingly, a low-interest rate applicable at the time of application may, during the term of the loan, grow at a higher rate than originally anticipated. A consideration when applying for a loan is, therefore:
– The interest rate
Building on this is the selection of a variable or fixed interest rate for the application. In contrast to the mentioned variable interest rate, a loan with a fixed interest rate over the entire term is not negotiable and changeable. This may not seem attractive at the moment; But as a borrower, you do not have to worry about any increase and are virtually independent of the ECB’s key interest rate.
In advance, the applicant should also be concerned about possible early repayment options. This could, for example, be a special repayment. This makes it possible to repay the loan prematurely either in the total remaining amount or a partial sum. The advantage of such an arrangement: If the borrower over time have additional funds, the entire loan and interest charge can be reduced and the repayment term is shortened.
Another issue that may be important for a loan application is personal collateral. Credit institutions often only lend out their loans if the borrower has appropriate collateral. Thus, a possible default, for example, if the salary ceases or in the worst case – the death of the customer, be collected. For this you should include the following item in the checklist:
– Does the loan offer also include so-called residual debt insurance? This is offered by many financial service providers and takes over, for example, the continuation of the loan installments on the death of the borrower. Important especially for families; so that the relatives do not get into financial distress through the installment. In the area of loan collateral, among other things, land and real estate ownership or income from rental payments are accepted. If you can not provide any or only insufficient collateral as an applicant for a loan, it is still possible to obtain a loan. But then often only with worse conditions, which can be reflected for example in much higher installment payments.
Basic requirements for a credit application
The criteria for applying for a loan, of course, vary from one institute to another. Ultimately, every customer wants to apply for a different loan amount and has different claims to term, interest and repayment modalities. Nevertheless, there are practically a few basic requirements that you can make a note of as an applicant for your checklist. These are usually the following aspects:
– the age of the majority of the applicant must be given
– Personal data (self-report form)
– An existing residence in Germany
– There is an account connection in Germany
– Regular income of the applicant
– Sufficient creditworthiness or collateral
Not to mention, if the borrower is not in a salaried employment relationship:
– In the case of self-employed applicants or self-employed persons, moreover, the income tax assessments of the last three years and a revenue/expenditure account. Sometimes this can also be the so-called business evaluation (BWA), which can be created for example by a tax consultant.
If the loan is to be used for free use, then no purpose of use must be specified when applying. Income or income can be paid in addition to a salary, pension income, rental income, income from self-employment or rental income – with the respective evidence. On the expenditure side, the applicant should list in his checklist:
– Rental payments including utilities
– Expenses for insurance contracts
– other existing credit commitments
– possible maintenance payments
For the area of creditworthiness, credit institutions are proceeding in different ways. What is meant by the term is the so-called creditworthiness of an applicant. This is usually queried with the help of a credit score from various credit bureaus. This can be, for example, the Bank (protection association for general credit protection). The result will be sent to the lending institution. This criterion is often used for positive lending. However, this has nothing to do with the current account balance of the applicant. The procedure involves assessing the revenue and expenditure incurred by the borrower. This is to check the extent to which a fairly balanced relationship exists. In addition, the financial service providers calculate how the customer’s payment history looked in the past and how it plays a role in future credit rating.
If the desired loan may be used for the rescheduling of a posting or other credit, the checklist should contain information such as:
– The respective financial institution from which the loan was concluded
– The bank account number and bank code of the credit institution
– The repayment term
– The corresponding balance
– If available – a transferred authority
The other way to the desired credit – Online loan comparisons
Before the actual loan application is made, of course, comparisons of the various offers are very useful. In the context of all financial business activities, not every loan offer contains the same conditions as the offer from the neighboring bank; even if both are even in the same place. In addition to the traditional offerings of the own house bank, these days also include special websites for online credit comparisons. Because – to compare the respective conditions of conventional banking institutions with each other is very complicated and costs a lot of time. Corresponding comparison portals can remedy this situation. They list the desired offers including term, interest rates, costs, and the required documents, or the procedure for the application. It quickly becomes apparent which loan offer is the most sensible and suitable for the customer. Comparative portals can also be helpful for the application. Most portals provide an overview of which documents are necessary for a successful application. The submission of evidence is feasible on some of the reference calculators online. In the case of an online degree, most people use a postal service procedure to identify the applicant. This requires:
– A currently valid identity document from the applicant
– For multiple borrowers, including spouse, IDs of all persons
– A completed Postident coupon
– Signed loan application and documents in a sealed envelope
In addition, it should be noted that even with online portals the applicant does not necessarily have to forego further advice on any questions that arise. Many providers provide specially created chat rooms or contact forms. The telephone contact with a credit counselor is often possible. This point, whether such customer service is actually available from an online credit provider, should also be considered in the checklist.
The loan application – with good preparation for the loan request
Good and intense preparation is everything. This also applies to the application for a loan. Whether one prefers to consult the own house bank, visits several credit institutes and leads a personal discussion with a consultant or favors appropriate comparisons over on-line portals – in each case a checklist for the request is always of great benefit. Once you have checked all the points – in the truest sense of the word – you are on the safe side, having forgotten no relevant things. Especially for a personal consultation with a bank, this is a great help and not to be underestimated. Thus, the applicant can respond to questions from the adviser and need not be confused in conversation. In addition, he can act confidently, as he has already familiarized himself with the subject of lending thanks to the checklist. Ultimately, the best offer for future borrower can be selected from the large offer. These features also apply to applications other than the usual bank loans – such as crowdfunding offers. Finally, if all prerequisites are met, there is nothing in the way of a swift and uncomplicated payment of the desired loan amount. Thus, it shows that with the handling of a few tips and thorough preparation, the way to your own credit can be met quickly and without any questions.