Monthly Archives: January 2020

Consumer credit – how it works

In short, all loans are referred to as consumer loans taken out by private individuals. In recent years, however, so many loan names have been pounded out of the ground that apparently there are separate loans for each person and subject group. Loans for the self-employed, real estate loans, car loans, vacation loans, consumer loans, consumer loans – in this jungle only bank employees can often find their way. In summary, a consumer loan is taken out by a private person in order to borrow a large amount of money. The reason for the loan is decisive for the type of loan. All types of credit are roughly divided into

  1. Dedicated and
  2. uncommitted loans

The conditions of a consumer loan are usually set, whereby the credit institutions can determine details themselves. It is therefore worth comparing several offers. This is the only way to find the cheapest interest so that you can save money. In addition, earmarked loans are often cheaper than untied loans.

    Dedicated consumer credit

    Dedicated consumer credit

    Some consumer loans already have their purpose in the name: car loan, wedding loan, real estate loan in the area of ​​mortgage lending. All these loans have in common that they are earmarked. This means that the bank knows exactly what the borrowed money is used for. In most cases, the object to be financed is deposited as security. If there is a default, the item will be confiscated by the bank. For example, if you want to buy a new car but don’t have the money, the bank will offer you a car loan. Some banks require the Kfz-Brief as security, but this is often not necessary. At dealer banks, however, it is not uncommon for the vehicle registration document to be retained until your debt has been repaid in full. The purchase contract for the car shows the bank that you actually bought the vehicle. In the case of construction financing,

    A dedicated consumer loan is generally cheaper because the risk of default is considered less by the banks. Since the item itself is deposited as security, it can be confiscated in the event of an incident. This also includes so-called point-of-sale loans, ie loans that are taken out directly from the dealer.

    Untied consumer credit

    As the name suggests, this type of consumer credit is not tied to any purpose. So you decide yourself what you use the money for. However, this means an increased risk for the bank, as it does not know what you are doing with the money and there is no certain equivalent. Therefore, other collateral is needed. The bank tries to compensate for this risk with higher interest rates. A typical consumer credit is, for example, the uncommitted overdraft facility. If you overdraw your account, the bank usually has no knowledge of the purpose for which you have used the money. Unfortunately, the overdraft is very expensive. Even if the interest on this consumer loan is settled on a daily basis, interest rates of up to ten percent are not uncommon. In some cases, higher interest rates are also possible.

    A calculation example compares the interest on a dedicated consumer loan with an unbound installment loan.


    The double interest rate can significantly increase the cost of a loan.
    For an uncommitted loan, interest rates increase almost twice. It is therefore always worth keeping interest rates as low as possible.Table: Comparison of costs of earmarked and untied credit

    Pay attention to a low interest rate and, if possible, use a dedicated consumer loan. This saves you the cost of consumer credit interest.

    When consumer credit is not tied up, you sometimes dig deep into your pocket.

    Legal requirements for a consumer loan

    Legal requirements for a consumer loan

    As with any contractual agreement, a consumer credit must also be recorded in writing. You cannot rely on oral appointments that were made on the side. They are not valid. The consumer credit and the terms of the contract are sealed with the signature of both contractual partners. By signing, both parties agree to the terms of the loan. All conditions are laid down in the contract. In addition, some points are mandatory. They must definitely be listed in the contract. This includes:

    • Effective interest rate
    • Net loan amount
    • borrowing rate
    • Fees and other borrowing costs
    • repayment arrangements

    A cancellation policy must also be included. You can object to and withdraw from the contract up to 14 days after the consumer credit has been concluded. Overdraft facilities are excluded from the listed criteria.

    Consumer credit: Which conditions are relevant?

    Consumer credit: Which conditions are relevant?

    The terms on which you take out consumer credit is up to you. This means that you can freely choose the amount of the loan, fixed interest rates and the amount of the repayment rate. The bank sets the interest rate. This depends on the amount of the loan you want to take out and the requirements you have. If your creditworthiness and creditworthiness are good, the bank usually offers you a lower interest rate than if you have to fear default due to a lack of liquidity. The bank will request credit check information. You can determine the term of the installment loan yourself. It is influenced by the loan amount. Both together influence the amount of the monthly rate. Invest some time to set the monthly rate. It will accompany you throughout the entire term and determines the monthly financial burden. At a higher rate, you will be debt free earlier and save interest. However, you should choose the repayment rate so that you can pay further financial burdens if, for example, the washing machine gives up.

    Is a home loan feasible without equity?

    That’s fine. However, for a home loan without equity, you must have certain requirements, for example:

    • an above average income
    • an excellent credit rating (verifiable by an impeccable credit check score),
    • a property for sale in very good condition and in the best location.

    In these circumstances alone, banks grant you a home loan without any capital of your own. In addition, each bank assesses the initial situation differently: some banks apply stricter criteria when it comes to equity-free house loans, others are more tolerant in this regard. In this respect, it is always important to compare offers and talk to the banks if you want to tackle such a plan. It is particularly important to compare the offered interest rates with each other. Our building interest calculator gives you a first impression of the current interest rate. It issues up-to-date sample conditions from our banking partners for your financing.

    Good income brings cheaper home loan interest

    Good income brings cheaper home loan interest

    An important consideration here is: the higher and more secure your income, the better the interest rate you get. Since banks already charge higher interest rates for home financing without equity, this makes a decisive difference. In our article on the subject of mortgage lending without equity, you can see from the example calculations that even small deviations in the interest rate can directly save several thousand dollars on a home loan.

    The risks of home loans without equity

    The risks of home loans without equity

    Financing without equity poses risks, but what are they specifically? The risk of no longer being able to service financing through unforeseen circumstances, such as sudden unemployment, is just as high for a home loan with equity as for a variant without equity. However, in the event of a compulsory auction, your own funds cushion the consequences better. Because the likelihood of remaining on higher debts is lower with a home loan with equity. One should not underestimate this factor. It is therefore extremely important to put your home loan on a secure footing right from the start.

    Let our specialists for mortgage lending advise you: They show you whether the risk of a home loan without equity is acceptable to you and, if necessary, find the right bank partner with a low-interest offer for your plans.

    A credit union broker: save time and money

    Sometimes, it is urgent to consolidate its credits because the financial situation is deteriorating rapidly. But you do not know who to talk to. Your banker, seen in the urgency, kindly refused your request for redemption of credit.  It’s time to seek the help of a credit union broker. Do not wait, a credit redemption or credit consolidation can allow you
    to balance your budget again.

    What is the purpose of a credit broker?

    What is the purpose of a credit broker?

    A credit broker is a person in charge of connecting a bank or credit institution with a customer. If this broker specializes in loan redemption, he is in contact with credit redemption organizations. He is well versed in the acceptance criteria for credit consolidation and will be able to quickly establish a credit redemption simulation.
    Each redemption file is unique. That’s why we value every online credit redemption request. We see all the possibilities with you and we submit your file to several banks. You save time and we take care of all the steps for you.

    Ideal for getting a credit pool at the best rate

    Ideal for getting a credit pool at the best rate

    You have subscribed to several consumer credits and credits online. The addition of all your monthly payments is too heavy to handle each month. You “juggle” between the various samples and your authorization of overdraft. Your financial balance is fragile. It’s time to consolidate loans. We are here to search for you the best deal with the best rate, the smallest fees among all credit banks specializing in credit redemption.

    How is a group of bank loans going?

    How is a group of bank loans going?

    The bank offers a credit of an overall amount to settle a set of credits as, to finance the cash requested and transaction fees related to the transaction. Once the loan offer has been signed by you, the bank will reimburse the various credits on your behalf and transfer to your cash account. You then collect any overpayments from each credit institution where you had credits, which are now refunded. The new single loan starts with a smaller monthly payment.

    Your job comes down to making your budget, determining the desired monthly payment and the cash flow you need and finally gathering all the requested documents. We are a pool broker, we take care of everything else and we do it well.