WHAT SHOULD BE CONSIDERED WHEN APPLYING FOR A LOAN IN GERMANY? - News-Credit-Mortgage-Coin

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Saturday, June 26, 2021

WHAT SHOULD BE CONSIDERED WHEN APPLYING FOR A LOAN IN GERMANY?


The four most important elements of a loan


  • Credit volume (Creditvolumen),
  • Loan period ( Kreditlaufzeit ),
  • Installment amount (Loan) and
  • Interest rate ( Zin ).

These elements are interrelated and can affect each other. If you choose a longer loan term, you will pay smaller monthly installments but pay more interest in the end. The loan volume can also affect the interest rate you are given. In addition, the purpose of your loan is also important: loans to buy a house are often cheaper than loans to buy a car.



WHERE TO GET A LOAN IN GERMANY?

Your personal bank can usually give you loans, but these loans are usually more expensive than other options. Online loans have become increasingly popular and offer better rates and lower fees for a local office branch and branch employees as they don't have to pay. Most loan applications are automated: The algorithms in the background calculate your individual credit risk and decide on your creditworthiness in seconds.


It's definitely a good idea to compare some online offers, especially for smaller short-term loans.



HOW EASY IS IT TO GET A LOAN IN GERMANY?

Whether you'll be approved for a loan and for how long depends on your employment status. Government-employed workers usually have no problem applying for a loan. It is much more difficult for young graduates and self-employed consultants or business owners with limited-term employment contracts.


Every time you apply for a loan in Germany, the bank or financial service provider will check your background. This background check shows your finances such as your monthly income, the amount of credit cards you have and the amount of different bank accounts. It also shows you how often you changed your registered address in the past, how often you applied for a loan, and more. According to these criteria, the bank will decide on your creditworthiness and approve or reject your loan application. This background check can also be a factor in the interest rate and loan volume awarded to you.

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