Are you an international student looking for a reputable online loan in Germany? It might be a little loan to help you furnish your new flat once you move to Germany, or a large loan to help you purchase a car or a home in Germany.
This blog covers all you need to know about getting a credit loan in Germany, including the many types of loans available and their requirements.
LOAN TYPES IN GERMANY
In Germany, many sorts of credit are offered based on the reason for the credit. The following are the most common types of credit loans:
- Installment Loans from RatenKredit: Personal Loans with Adjustable Monthly Payments
- Personal credit loan with a set monthly payment – RahmenKredit
- AutoKredit – Loan for buying an automobile, Car Loans for auto financing in Germany.
- Wohnungskredit (Immobilien) – Home credit, home loan, or mortgage loan.
- Instant Credit with SofortKredit
IN GERMANY, THE REQUIREMENTS FOR GETTING A LOAN
Germany is a credit-conservative country, therefore getting a credit loan is difficult unless you match certain criteria. As a result, to acquire a credit loan from a bank in Germany, you must meet at least the following criteria:
- A good SCHUFA score, which translates to a strong credit rating.
- A permanent residence permit, or at the very least a resident permit or Visa that covers the duration of the loan.
- You should be able to offer your pay stubs as proof of regular and reliable income. If you work as a freelancer, you can present your tax returns from the previous year as well as your regular monthly billing. If you receive frequent work from a single client, you might request that the company indicate that you may receive regular work from them and the potential amount you will earn.
If you meet the following criteria, you may be able to obtain a loan from a German bank for a reduced interest rate. However, don’t be discouraged; if you don’t meet the criteria, you can still receive a credit loan from another organization, albeit at a higher interest rate.
THE REASON IS VERY IMPORTANT.
Although it is all about money in the end, a lot depends on whether you apply for the proper form of loan from the right lender.
For example, if you have a down payment of more than 20% of the house’s worth, you will have a good chance of getting a mortgage. A mortgage can be obtained in a variety of ways.
It is preferable to apply for a car loan directly with the car dealer because they have better deals and connections with the banks.
WHAT ARE THE OPTIONS FOR GETTING A LOAN?
In Germany, there are a variety of institutions that offer loans. The rate of interest varies depending on the institution.
- BANK CREDIT LOAN
The first option is to contact the bank with which you have a loan. Because they know the client, they usually provide credit with the lowest interest rate and the simplest documentation. Other securities (stocks, fixed deposits) with the same bank can sometimes be used as collateral for a better interest rate.
- GET A LOAN FROM A CREDIT INSTITUTE
They offer more flexible credit than banks, and most of them are available online. The fees, on the other hand, are frequently larger than those charged by banks.
- LENDING BY PEOPLE TO PEOPLE
They are primarily websites that act as a conduit between lenders and borrowers. In some circumstances, investors just put money into the platform, which then picks potential borrowers.
- SMALL or MINI LOAN
Having an emergency fund that covers at least three months of your costs is a recommended financial practice. However, we recognize that life can be difficult at times, and you may find yourself living paycheck to paycheck. The first piece of advice is to ask your family or friends; however, this may not be practical if you live abroad.
These are quick loans used to address an immediate need that cannot wait until your next paycheck. Payday loans, also known as cash advances, are short-term loans that last for a month or two and are for extremely modest amounts. It is also more forgiving when it comes to credit scores. However, interest rates are quite expensive, reaching as high as 15% on credit cards.