Good to know

How to get a loan in Germany

Three main conditions

You often ask yourself how to get the loan in Germany. Maybe you need to buy a house, maybe a car or you need some money to start your business idea. All that sounds good, but for that, you need to know a few things about the about the conditions for obtaining a loan in Germany. Conditions of getting the loan in Germany are a very important item and you should know them well before applying for a loan in Germany. There are three conditions for a loan that must be met in order to get a loan in Germany:
You must be at least 18 years old;
You should have an address in Germany
(important for creditworthiness verification);
There must be a regular income

(It is important to pay interest and repayment).

In addition to these conditions, you must still be able to prove a steady and sufficient proof of income (2-3 pay-rolls), and present a decent result in SCHUFA. All this varies from bank to bank, depending on the bank or association from which you are borrowing.



You need to find the best deal

Check Offers

People often do not exploit this, but a loan in Germany is a product like any other "you can shop around"! There is no need to stick to your banks. It is advisable to look at comparison websites that can provide you with a quick idea of what is possible in your current situation. There are numerous websites. I recommend that you check them out to use the competition for your benefit.
A wider range of choices for your special needs. Much more competitive prices and flexibility in installments. SCHUFA result is still an important factor in getting the loan. All in all, take a look at the entire offer before you take the loan.





What is SCHUFA?

What does that mean in Germany?

SCHUFA or a credit rating agency that assesses creditworthiness.

It is about the creditworthiness of potential buyers to protect themselves from credit failures. The name SCHUFA originated from the phrase "Schutzgemeinschaft für Absatzfinanzierung", founded in 1927.

Accordingly, SCHUFA primarily collects data through contracts that are essential for the performance of payments.

Depending on your SCHUFA estimates of your creditability, you can determine, for example, whether your bank will open a current account with a credit card or what interest you have to pay for a loan, whether or not your bank will approve the loan. The higher the risk for the bank (the worse your SCHUFA report), the less your chance of getting a loan.

Any payment, any inability to charge from your account, is located in Schufi. So be careful when it comes to managing your finances. Try to make sure that you always have cash in your account when someone needs to download money from your account. All this "destroys" your creditworthiness and as a result, it is impossible to get credit or get loans with very high- interest rates.

If you want to inspect your SCHUFA report you can unsubscribe it once a year for free. Every next time it is paid. Download an online form, fill it out and send it.

You can download it here.


Credit insurance

Should I take it?

When you getting the loan you often offer a variety of credit insurance. You probably wondered if you would like to add credit insurance. Most people have this type of insurance rejected or accepted automatically, without knowing whether this is the right kind of insurance for their needs.

As with all the insurance, the determination of needs differs from person to person due to different lifestyles and obligations.

Credit insurance can be useful for someone, but sometimes only unnecessary expense for others depending on someone's situation. Knowing what credit insurance you take can help you make an informed decision. Credit insurance in most banks in Germany does not affect the decision to get a loan. So if you take insurance, for this reason, know that does not affect the decision will you or will you not get the loan. Think about insurance how well it is, sometimes it is an unnecessary expense that will sometimes cost you up to 2000 euros in addition to your credit.




Types of bank cards in Germany

Credit or Prepaid Cards?

There are several types of cards in the German market. We'll mention some of them.

Revolving credit cards

Revolving credit card is a card with an approved personal spending limit that represents a revolving credit, or "self-generating". The client according to his wishes decides on the amount of loan he will use, on how and on how to repay the loan. If the client does not want to pay the costs at once, then the unpaid costs become the utilized part of the approved loan to which the client pays interest.

The bank as a card issuer determines the minimum percentage of the loan used, which must be paid monthly, for example, 5 or 10 percent of the loan used. Credit card, as well as debit, can be used to raise cash at the ATM and to pay in the merchant-service network.

Example: Mastercard Gold

Debit cards

Debit cards are cards issued by banks with various deposit accounts. They are used to cash in the account to which they relate. Only those accounts that are in your account can be used, for example, from your monthly salary. This means that cards are non-credit cards. Transactions made with this type of card are cash and purchase transactions. Although debit cards are generally not related to the interest rate, they are subject to payment of certain fees. In most cases, you get this card in Germany when you open a current account and is mostly free.

Prepaid cards

Prepaid cards are payment cards most often not linked to a credit or debit account. As a rule, it's about anonymous tabs (say to the donor), but on the other hand, they can be personalized with the person. As the name suggests, it is about prepaid cards, that is, cards that are either pre-denominated to an amount (e.g., a phone card) or they make a payment of a certain amount (charge) to the card that is then available free of charge student cards for food).

Example: Viabuy





P2P lending

Yes or no?

So-called Peer-to-peer credit is a practice of matching borrowers and lenders through online platforms. Borrowers can often access funds quickly and usually at lower interest rates than those offered by their local banks, making it an attractive alternative to a bank loan. Loans issued often consist of many different lenders ranging from individuals to institutional lenders.

Individual and professional lenders benefit from being able to lend money to a range of interest rates based on the creditworthiness of the platform. Since lenders usually finance only part of the loan and the amount lending to many customers, lenders can potentially receive constant, attractive returns while at the same time spreading the risk through multiple borrowers.

P2P lending has experienced rapid growth because people who need a loan are looking for alternative banks.
With this method, it is easier to get a loan and not look at Schuf, but if you are not looking at SCHUFA, there are often bigger loan interest rates that are approved.

Example: Auxmoney