Taking out a loan with debt is not a good idea

A loan should always be considered carefully and only taken out if there is sufficient financial backing. Nowadays, hardly any bank lends to people who cannot have regulated financial circumstances. However, there are also banks that deliberately attract people who are financially weak and for whom a loan only means further indebtedness and financial burden. For this reason, you should always first consider the personal financial situation, compare income and regular expenses and consider whether the loan is really necessary, as there are often alternatives to the loan that keep the financial burden low. The most common motivation for taking out a loan is the acquisition and financing of larger wishes or necessities like a car for the daily route to work, a new home furnishings after a move, the financing of one vocational training or a course of study as well as financing for special requests.

Is loan really necessary?

Is loan really necessary?

In most of the cases listed here, a loan is not really necessary, as there are other ways to fund these things without getting into debt in the long run. For a large part of the training, the state offers an alternative to bank loan through grants such as German Credit Fund or the training loan. These grants enable good financing without the risk of debt. Cars or furniture can also be paid off in tolerable monthly installments without having to take out a loan that allows immediate payment, but is a greater burden. If you want to fulfill bigger wishes, you should rather put something on the high edge every month instead of taking out a loan.

Old loan first

Old loan first

If debts already exist from a previously taken out loan or the financial situation does not allow any leeway due to debts, you should generally refrain from a new loan until the existing debts have been completely paid off. In most cases, however, the repayment takes a long time. During this time, new situations can arise unexpectedly that make a loan almost impossible. If such a case exists, it is advisable not to contact the bank directly, as this will usually advise a loan, but to seek advice from an objective financial advisor.

They can quickly determine whether taking out a loan is in your favor or at your expense. If there is no other way, you should inform yourself about the loan offers of various banks. A low interest rate and flexible repayment options are important. Numerous test reports can also be viewed online. This way you can take advantage of other borrowers’ experiences. A financial plan is mandatory for debt in order to keep an overview and to take possible risks into account. You should also document your income and expenses and find ways to reduce expenses.

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Loan despite Credit Bureau and poor credit rating

More and more borrowers are struggling with difficult conditions when borrowing today, for example because they have a negative Credit Bureau or a low earned income. A few years ago, there was almost no way for this growing group of people to find a loan – especially not at attractive interest rates.

Today, despite Credit Bureau and poor creditworthiness, a loan is available from numerous banks, primarily online and direct banks on the Internet, also market loans with a negative Credit Bureau.Particularly, the loan offers are loans despite Credit Bureau and poor creditworthiness, for which Credit Bureau provides information lending is not taken into account. By not providing Credit Bureau with information on lending, this cannot have a negative impact on the creditworthiness of the borrower when borrowing.

However, the borrower must expect a slightly higher interest rate, which is mainly due to the bank’s higher risk in lending. As a negative Credit Bureau loan is now offered by many banks, borrowers should not avoid the loan comparison before the contract is signed. Numerous financial portals help the borrower today and provide a loan calculator for free use.

Borrowing despite Credit Bureau and poor creditworthiness – the borrower must meet these requirements

Borrowing despite Credit Bureau and poor creditworthiness - the borrower must meet these requirements

In order to take out a loan despite Credit Bureau and poor creditworthiness, the borrower must above all meet the income requirements of the banks. As a rule, loans without Credit Bureau require a certain earned income so that the repayment can be secured. In addition to a high and regular income, borrowers should also meet the general conditions of the banks in terms of loan amount and term.

In addition to the individual criteria, borrowers must also observe the legal framework when taking out a loan without Credit Bureau. Borrowing requires that you are over the age of 18. The unrestricted business ability is just as important for the borrower as a permanent residence in Germany and the ability to identify yourself with an official photo ID.

Taking out a loan with a negative Credit Bureau – This is how borrowers can secure attractive interest rates

Taking out a loan with a negative Credit Bureau - This is how borrowers can secure attractive interest rates

Borrowers with a high and regular income can raise hopes of low interest rates, as the bank assumes a lower risk of default. The same is expected of borrowers who opt for a low loan amount and a short term. Short terms and low loan amounts also help to reduce the risk of default and capital commitment for the bank.

By choosing a short term, there is another positive side effect, the borrower can reduce the remaining debt faster thanks to the high repayment. In practice, a quick reduction of the remaining debt leads to lower interest costs, since the interest costs are determined by the remaining debt.

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