What does a bank need to issue loans?
According to SCHUFA, 15% of the German population receives a loan – Finansierung. As elsewhere, Germans borrow cars, household appliances, furniture, gadgets and other expensive things.
Banks in Germany grant loans to residents of the country, so the borrower provides proof of residence in Germany and a residence permit. When applying for a loan, they ask for a registration certificate or other document indicating the address – for example, a phone or Internet bill. For more details about the banks.
The second condition is the applicant’s current account with a German bank. The creditor bank withdraws monthly payments from him to offset debt and interest.
For bank approval, the borrower shows proof of permanent income – a salary slip from work or an account statement justifying the source of income will do. Private entrepreneurs receive a certificate from the tax office. Insufficient income to repay the loan leads to rejection. Read also: Post Bank, Shufa paper in | schufa clearance.
Loans for refugees and relatives
Refugees and foreigners are granted a residence permit, the term of which covers the maturity of the loan. For example, a foreigner was issued a residence permit for 3 years, and the estimated term of the loan is 5 years. In this case, the case is considered individually: some banks will refuse, others will offer special conditions to reduce risks.
The task of the borrower is to demonstrate financial well-being: a stable job, a high salary, other sources of income. If everything is fine with the income, but the residence permit expires before the term of the loan, then it is difficult to get money, but in fact.
Before deciding on a loan, the bank requests information about the potential client from the SCHUFA database. The system stores personal information about borrowers and their financial obligations: debts, due dates and interest payments, mobile communications contracts, landlines, the Internet.
Difficulty obtaining a loan
It is difficult to get a loan with a bad history in Shuva. If the database contains negative information about a person, they will refuse to issue a loan or give high interest annually. Over time, this data disappears, so some Germans wait several years to borrow. If money is urgently needed, borrowers turn to private or offshore lenders. For example, Swiss banks issue loans without checking the registry, but at a high interest rate and with mandatory additional paid services. Read also: The closed bank account in Germany Sperrkonto, what are the best banks and are there alternatives to it.
Read also: German driving certificate questions for free in Arabic, driving certificate, nationality, permanent residence
Conditions for obtaining loans
The bank examines the structure of the applicant’s income and expenses, calculates the amount that the client is willing to pay each month and makes an offer.
Income includes salary (net), pension and rental income. Child support – Kindergeld – is not taken into account.
Expenses include rent, insurance premiums, food, transportation, telephone, Internet, entertainment, entertainment, clothing, and payments on other loans. Annual costs such as auto insurance are divided by 12 months and the result is added to the monthly costs. Read also: Small projects at home, what are the stages of starting production, why are they profitable, and ideas that have not been implemented before.
loan repayment period
The amount remaining after paying all expenses is the borrower’s maximum monthly payment. The bank takes two amounts: the monthly installment and the loan amount and calculates the due date and annual interest – individually for the applicant. The shorter the repayment period, the higher the monthly payment and vice versa.
For example, a client charges 10,000 euros for two years, then pays 475 euros per month. If the repayment period is increased to four years, the monthly fee becomes 230 euros. The percentage of the loan depends on its term – the rate is higher for short loans. But if the borrower “stretches” the repayment of the debt, then the total amount of payments to the bank is higher than for the short loan – this is how the banks earn. Therefore, it is more profitable for customers to pay off debts faster.
Another example: a resident of Germany asks the bank for 15,000 euros and wants to know how long he will provide this amount. Let’s say that after analyzing income and expenses, the customer receives 500 “free” euros per month. Based on this amount, the bank will offer to borrow for 3 years and pay 429 euros per month at 1.9% per annum.
If you take another client who takes the same amount, but is willing to pay 300 euros per month, then the loan term for him will be increased by several years and the interest will be reduced. But collectively, the second customer will pay the bank more.
The loan repayment period should be reasonable: there is no point in paying 10 years for a car, but paying the mortgage on your home for 10-20 years is normal.
Obtaining a loan from the bank
The client makes an appointment at the bank, comes for an interview, and after talking with the bank employee receives an offer from the bank in the form of a loan contract.
If the customer agrees, he signs the contract and sends it to the bank. The bank asks for confirmation papers. If the bank is satisfied with everything, the money will go to the customer’s account. The duration of consideration of the case – from several days to several weeks, depends on the bank.
Be wary of the advisor and suggestions. The employee is interested in the owner’s profit. The writer’s job is to convince you to take on debt on the best terms. to the bank. Don’t be limited to one sentence. Read also: Sparkasse Bank in Germany, how to open an account with it, the necessary papers and documents, and the most important features of the bank.
Interest on loans
The ratio also depends on the goal – the bank wants to know why a person needs money in order to assess risk. If there is no specific goal, and money is required for free use, the bank will set a higher percentage. If the customer takes out a loan to buy a car or is on vacation, the price will be lower.
Sometimes in German stores there are “0% -Finansierung” promotions, during which they receive favorable terms on the loan. Germans consider it normal to borrow to buy a house, renovate or start their own business. Consumer loans for appliances, cars, or home appliances are not welcomed by citizens.
Popular loan purposes:
home improvement – furniture and kitchen;
car, motorcycle;
The birth of a child;
Arranging the home workplace for entrepreneurs;
vacation;
education and professional development;
wedding.
The percentage depends on the bank and the status of the customer. For 2017, the minimum is 1.69% per annum with €10,000.
Advice: In the case of Muslims, many ask about Islamic loans. Is it permissible to withdraw a loan to buy a house?. What is a fatwa on a loan from an Islamic bank? Therefore, some fatwas have been issued, especially by the European Council, permitting taking loans for the purpose of housing, after exhausting all permissible methods to obtain money or a loan in another way, and there is really nothing left but the loan. necessities in human life. For example, a loan from the Kuwait Turkish Bank
Get a loan online
Online loans are regular loans that have a difference. The difference is that if you receive a loan online in Germany, you do not have to go to the bank in person. Do everything online and you will feel comfortable in your own home. Select the desired loan amount, fill out a short online application, submit it and wait for a quote. If the amount is small or with the intention of studying. You may get interest-free or very low interest loans. To learn the details of how to withdraw a loan from sparkasse
In conclusion, dear reader. Loans, foreigners, like the Germans themselves, are entitled to a mortgage when buying a house. The most important condition is that a loan be issued to non-residents only for the purchase of income-generating real estate (ie when buying an apartment or house, this apartment must be rented until the loan is fully repaid).