If you want to fulfill a greater desire or need urgent money, it’s worth taking a loan. If you do not have a permanent job, you do not earn enough, or you’re already in debt, your chances of getting a loan are rather bad. Do not be discouraged by credit denials – there are always several ways to get the loan you want.
Personal loan – the solution to many problems
As the name suggests, the lender for personal loans is not a bank, but a private individual. If you do not get credit from the banks, it is worth looking for a suitable personal loan. The requirements for private loans are less stringent and are not tied to specific policies. Of course, you must convince the lender of your credit rating and prove that you are able to repay the loan amount. Also, collateral such as a home or the appointment of a guarantor are very helpful in the private loan. As with “normal” loans, a contract is also concluded for personal loans in which all rights and obligations are listed.
How do you find the best loan?
There are a surprising number of personal loan providers that provide small and large sums of money. In order to find a good provider for the loan from private, you should use the comparison possibilities of the Internet. There you will find many private lenders with whom you can contact. Of course, it is also important for personal loans to pay attention to advantageous conditions. As private lenders take on higher risks than banks, interest rates tend to be slightly higher. The exact interest rates depend primarily on your creditworthiness and the amount of the loan.
If you have bad cards at the banks, it is definitely worthwhile to apply for a personal loan.
What are the advantages of a personal loan?
There are several reasons that cause a private person to take out a loan.
This is especially true if larger consumer needs are to be financed, which can not be coped with from current revenues or savings.
A personal loan can be given either by a bank or by a private individual. Its most important feature is the fact that it can only be used for private and never for business expenses.
In the vast majority of cases, a bank loan is at the free disposal, is paid in one amount and must be repaid in monthly installments. There are sometimes considerable differences in rates and interest rates. For this reason, any private person interested in installment or consumer credit should take their time choosing a suitable lender and consider not only the home bank but also other branch or direct banking services.
A bank loan is awarded only if the customer has a secure income and a positive private credit. A corresponding check is carried out immediately after the loan application has been submitted, for which the borrower must present various documents, such as the current proof of income or the employment contract.
Under certain circumstances, it is possible to obtain a foreign bank loan without private credit. For this, however, a secure income would be an indispensable prerequisite.
If you would like to receive a loan from a private person, you can either look around in the circle of your friends or relatives or register on a lending portal on the Internet.
In principle, private individuals decide who they will lend under what circumstances. There are no clear and unambiguous guidelines for this, as is the case with bank loans. Nonetheless, individuals will also check their creditworthiness and reject lending to a person who is clearly too big to risk being unable to repay the loan.
If a loan agreement is concluded, it should be adhered to in detail by both sides. For the borrower, this would mean paying the installments on time and in full.
What are the risks of personal loans?
Borrowing not only brings opportunities but also a whole range of risks. Even if these risks can be partially hedged by a residual credit insurance, each future borrower should consider very carefully whether and under what conditions he would like to take out a personal loan.
This includes making a budget statement and comparing personal expenses and revenues. Only then can a clear answer be given as to whether and to what extent margins exist for the payment of credit installments.
Basically, banks and private lenders assume that the longer the maturity and the higher the amount borrowed, the greater the potential credit default risk.
Unemployment and disability
A secure job can be lost and the borrower can seriously get sick during the term. This is often associated with significant financial losses, which not only seriously jeopardize the payment of credit installments, but can also make it completely impossible. For this reason, it is advisable to think about taking out a residual credit insurance offered by most banks. However, to get a loan, this insurance is not.
If the insured event occurs, the monthly loan installments can be taken over by the insurance company until the borrower is able to do so again. The costs for the residual credit insurance are included in the effective annual interest and are not charged extra to the borrower.
Death of the borrower
Especially with an older borrower there is an increased risk that he will die during the term of the loan. If there is no residual credit insurance, the survivors have to pay for the open loan amount and can thus be in considerable financial difficulties. For this reason, many banks have set a certain maximum age for borrowing and / or insist that the borrower provides a guarantor. Ideally, this person should come from your own family and have a perfect credit rating. In addition, the conclusion of a residual credit insurance, which includes the death, is strongly recommended. If the insured event occurs, it compensates the outstanding balance and ensures that the surviving dependents are not burdened with it.