Overdraft facility or “overdraft account” | Loan now

 

A current account credit is the possibility to overdraft a current account for a limited period by a predetermined amount. It is granted to the owner by the bank and serves to bridge short-term bottlenecks in solvency. Therefore, it is also a way to finance a purchase quickly and easily, as long as you are able to pay it off in the foreseeable future.

The current account credit is characterized by the fact that it can be called up at any time. The owner of the current account is therefore not obliged to announce the use in advance. Current account credits are also repayable at any time, there are no installments or similar.

The current account credit is legally a loan in the sense of the German Civil Code. However, it is more flexible in terms of terms, amount and repayment options than a normal loan. The bank must guarantee that the loan amount is available at all times. At the conclusion of the contract, a limit is set which the borrower may use to the maximum. However, he is completely free to choose whether to use the full amount or only partial amounts. In both cases, the bank must ensure that the money is available and can be paid out.

Types of current account credit

Types of current account credit

  • The most common form is the overdraft or short Dispo. This is a current account credit granted to private individuals for their own current account. It is very widespread and is granted to many customers by their bank. A current account credit can also be very helpful for companies. They help them to avoid short-term financing bottlenecks.
  • The most common is the working capital loan. For example, companies can use this to compensate for any time lapse between payment obligations and sales receipts. A current account credit is also a useful option for companies that are very dependent on a season. If the costs are incurred before the earnings season begins, a working capital loan provides the necessary remedy.
  • Another type of overdraft facility for companies is interim loans. For new projects, it can happen that the financing is theoretically secured but the money cannot yet be used. This may be due, for example, to the fact that certain home loan savings contracts are not yet available, or that equity capital may only be accessed after the investments have matured. In order to avoid delays, companies can then use an interim loan. For credit companies, this type of overdraft facility is associated with a relatively low risk, since the financing is already secured and can only be used at the current time.
  • Pre-financing works in a similar way to interim loans. The big difference here, however, is that the financing of the project has not yet been secured. This can have temporal but also formal reasons. The banks run a greater risk here than with the interim loans, as the financing can still fail. Therefore, the interest rates on this type of loan are higher. Both pre-financing and interim loans are designed for an average of 1 to 2 years.

Terms and conditions

Terms and conditions

The credit limit, term, interest, purpose and any collateral are recorded in the current account credit agreement. Collateral is rarely required for simple overdraft facilities. In general, however, the higher the contractual limit, the more likely it is that collateral will be required.

Regular deposits into the account are a prerequisite for a posting control. The limit offered is usually based on this. The banks expect that a used overdraft facility will be repaid within 2-3 months. Therefore, the credit limit is usually 2-3 times the monthly deposit. The aim is to prevent long-term or steadily increasing debt through these measures.

The interest on the loans is based on the market interest rate. You only pay for the amount that is actually used and not for the credit limit. Compared to other forms of credit, they are relatively high, which is another means of preventing long-term use.

In addition to the cost of interest, overdrafts can also incur costs for credit and sales commission. The loan commission is paid for granting the loan, while the sales commission is similar to an account maintenance fee.

The contract ends upon expiry of a period or upon termination of the credit institution. In the event of termination, the loan amount is due immediately. If an amount falls due due to a deadline, this does not necessarily end the credit relationship. A tacit agreement may have been reached that continues to entitle the borrower to use the loan volume.

overdraft

overdraft

A limit is set for each current account credit, up to which the borrower can exhaust the loan. The limit represents the maximum amount that is available. However, if the borrower determines that the amount is insufficient, he must notify the bank and negotiate with him about the possibility of an overdraft. The bank is under no obligation to allow an overdraft that has not been agreed.

If an overdraft has been approved and it is actually used, further interest will be due for this. The overdraft interest is somewhat higher than the already relatively high current account credit interest and is intended to keep an overdraft as short as possible.

A special case is a “tolerated overdraft account”. This is the case if an overdraft has not been agreed with the bank in advance, but is nevertheless tolerated by it. If this overdraft is tolerated for a period of more than 3 months, then it is considered tacit consent to a new loan agreement. Therefore, this type of overdraft poses a risk to the banks.

Debt credit – rip off credit

When rescheduling, the obligations are changed, but not the amount owed. To repay loans, the borrower can choose other forms of credit and / or change the lender. The need to reschedule existing debt can arise for a number of reasons: particularly low market interest rates are used or excessive costs of existing credit obligations have to be avoided. Securing liquidity by extending the loan terms may also require rescheduling.

Certain loan relationships, such as a maturity loan or mortgage loan and other fixed-interest loans that expire, will also have to be rescheduled. Loans can be rescheduled by private individuals, companies, but also states.

Paths into the debt trap

Paths into the debt trap

While debt restructuring is often the only way out of the debt trap for the borrower, excessive borrowing, the use of expensive overdraft facilities or bad economic decisions quickly lead companies and private individuals into the debt trap. Loans can be rescheduled if the borrower can barely meet the cost of the loan and an adequate repayment of the liability is impossible. With the debt rescheduling, usually lower interest rates, longer terms and therefore generally lower repayment rates are agreed.

In particular, entrepreneurial bad investments (investments or participations), high losses or insufficient equity available in the short term can lead to the insolvency of companies. In the past, it was mostly corruption, bad economic investments and high armaments expenditure – or a combination of the factors – that led to overindebtedness.

Benefits of debt restructuring

Benefits of debt restructuring

The conversion of existing credit relationships can reduce interest charges and / or repayment rates. In accounting terms, the interest charges are expenses in the sense of accounting, while the repayments burden the liquidity of the borrower. To avoid over-indebtedness or insolvency, cheaper financing options should be used. Not only companies, but also private individuals can go bankrupt. In addition to the affidavit, personal bankruptcy is an option for natural persons to be released from payment obligations in a given period. Even during private bankruptcy, the involved insolvency administrators and advisors try to consolidate and reschedule the loans.

However, the debt relief often associated with personal bankruptcy is not a debt rescheduling in the legal sense. The debt rescheduling ideally leads to a reduction in the repayment burden (due to lower interest rates and possibly adjusted repayment modalities) and can thus improve the liquidity and thus the scope of action of the borrower.

Debt restructuring opportunities

Debt restructuring opportunities

Lower interest rates, also due to the change between fixed and variable interest, lead to lower costs for the loan, which enables higher repayments. A financial relief can also be brought about by extending the loan term. The consolidation of loans, which converts short-term into long-term liabilities, enables a longer loan term. The long-term liability is mostly used to offset existing short-term loan agreements.

Suspension of repayments or final repayments, also called “bullet payment” (repayment at the end of the term), are also suitable measures to ensure the liquidity of the borrower. Neither the deferral nor the debt relief count as rescheduling, since in these cases the debt is not reduced by repayments; in the event of a deferral, interest and repayments due are only suspended and thus deferred. However, if the deferral affects the term, this extension is considered a debt rescheduling.

Legal implications of debt restructuring

Legal implications of debt restructuring

If the obligation remains and is only changed by additions such as contract supplements or supplements, then it is a change in obligation. However, if a new credit contract is concluded, with or without a change of lender, there is a novation with which the original credit relationship ends in accordance with §241 BGB. In the case of in-house debt restructuring, for example to replace a current account credit with an installment loan from the house bank, there is basically a contract change. As a legal consequence, a guarantee for the current account credit may be transferred to the new loan.

Debt rescheduling in the private sector

Debt rescheduling in the private sector

Debt restructuring offers itself not only to benefit from cheaper interest and repayment rates, but also to restore creditworthiness. In the private sector, debt rescheduling can be used to combine the loans resulting from various obligations, such as partial payment purchases from mail-order companies, installment loans and bank overdrafts, to form a total debt. A longer loan term, combined with cheaper annual interest rates (nominal interest plus the loan costs) enable the borrower to have an improved financial situation and easier and more transparent planning of the financial budget.

When rescheduling the loans, it should be noted that additional costs may arise for the termination or for taking out or providing the subsequent loan. Loans with variable interest rates can generally be terminated with a notice period of three months. Fixed-rate loans can be terminated six months before the fixed interest rate expires. If a fixed interest rate of more than 10 years has been agreed, this can still be terminated at the end of the 10-year period.

If, however, the fixed-interest loan contract is terminated before the fixed interest period expires, the lender will request a prepayment penalty (VFE), which was agreed upon when the loan contract was concluded. Depending on the possible new conditions, even the payment of the prepayment penalty can have an advantageous effect on the financial situation of the rescheduling borrower – for example, if the savings from the new conditions exceed the costs of the VFE. In the event of early repayment of home loan, no prepayment penalty will be charged.

Mortgage loans that are granted when buying or building real estate are usually provided with a fixed interest period, after which rescheduling of the remaining debt must be entered into. The follow-up financing can be concluded with the lending bank or with a new lender, although additional costs for the changes to the land register entries are due and must be paid by the borrower. The mortgage loan is also suitable for debt rescheduling in the private sector, for liabilities that are not caused by building a house or acquiring a home. Mortgage rates are usually particularly attractive due to the transfer of property rights.

To ensure rescheduling or follow-up financing, the borrower can also take advantage of a forward loan. The forward loan ensures the favorable interest rates on the capital market for a loan that will be sufficient in the future. However, the lender charges a fee for the period until the loan is paid out: the commitment interest. Interest payments on the loan or repayments, however, are only due when the loan amount is paid out in the future.

Debt restructuring of corporate loans

Debt restructuring of corporate loans

In certain legal forms, such as the GmbH (limited liability company), the entrepreneur is legally obliged to report insolvency. Failure to do so could result in fines and imprisonment. However, investors and capital providers of the company must also be informed about critical indebtedness and the financial situation of the company. In order to determine the solvency and the financial basis of the company, business indicators are used, which can also be used to analyze the equity and debt structure or the level of debt.

The company’s debt sustainability results from the ratio of liabilities, including lending service (interest and repayment service) to cash flow. If the liabilities permanently exceed the operative cash flow by 400 percent or if the debt service exceeds 50 percent of the cash flow (DCR), the company’s debt situation is considered critical – although more accurate comparative figures depend on the industry. The debt cover ratio (DCR), also known as debt service coverage ratio, states whether the cash flow is sufficient to service the debt or whether the servicing of the loans is at risk. If the DCR is exceeded permanently, the company is in crisis. It makes sense to seek debt restructuring with the creditors with the highest liabilities.

Debt rescheduling

Countries in crisis can also consider rescheduling their foreign debt, but this is not referred to as rescheduling, but mostly as “restructuring”. The extent of the state crisis can also be determined using key figures. The states are supported by the World Bank, the Paris Club or the International Monetary Fund (IMF) in debt rescheduling.

Taking out residual debt insurance – is it worth it?

The residual debt insurance is an insurance that is also referred to as residual credit insurance or credit life insurance and is referred to as RSV for short. The purpose of residual debt insurance is to protect the borrower or sometimes his or her surviving dependents from the consequences of borrowing. The protection within the residual debt insurance is variably compatible. This means that a residual debt insurance against death, but also against illness or unemployment can be taken out. In relation to the lender, the residual debt insurance is very good protection in the form of additional credit security. For this reason, residual debt insurance is often ceded to the lending banks when borrowing. In Germany, residual debt insurance accounted for 2.9 percent of the total insurance sums in 2009. The average amount of residual debt insurance in Germany in 2009 was 11,600 USD.

The importance of residual debt insurance

The importance of residual debt insurance

The residual debt insurance can be taken out by the borrower as well as by the lender. If the lender takes out residual debt insurance, this agreement is made at the borrower’s expense. The protection can be against death, illness and incapacity for work as well as unemployment within the credit period. The insured person is always the borrower. In the event of the borrower’s death, the insurance will assume the remaining debt from the loan taken out. This means that the insurance company will repay the remaining credit. In the event of illness or unemployment, the insurance company pays the installments until the borrower may be financially able to meet the loan again. The residual debt insurance is usually concluded within a group insurance contract instead of an individual insurance contract.

Residual debt insurance, also known as RSV in technical jargon, originated in the United States in the 1950s. The first contract of this kind was approved in Germany in 1957 by the Federal Insurance Supervision Office. In the case of installment loans and annuity loans, the RSV is usually concluded against the payment of a single contribution, which in turn is included in the loan. In the case of current account or revolving loans, the contract is such that the current outstanding balance is determined each month and that the contribution for this outstanding balance is calculated for the current month.

Different forms of protection against other risks exist today. The classic of residual debt insurance was protection against death and incapacity to work. This was supplemented in 1995 when insurance against unemployment through no fault of its own was included. The residual debt insurance was supplemented in 2006, when serious illnesses such as cancer, heart attacks or strokes were included in the benefits catalog of the residual debt insurance. For this purpose, assistance services, so-called assistances, were used to support the borrower to reintegrate into working life.

Thus, the protection within the residual debt insurance has been greatly optimized over the years of its existence. This is also important because a bank customer has a long repayment obligation to the bank when taking out a loan. It is therefore inevitable to consider what happens in the event of an illness, accident or even death of the borrower. In the event of death in particular, the heirs are automatically obliged to repay the loan together with the heir. Experts recommend considering taking out residual debt insurance from a loan amount of 8,000 to 10,000 USD. An alternative to the residual debt insurance can be to overwrite an existing risk life insurance for protection. However, life risk insurance only pays in the event of death, so only covers survivors in the event of a loan default.

In addition, borrowers can also check their existing occupational disability insurance to determine whether there is sufficient coverage for the repayment of installments in an emergency. As a rule, most providers of installment loans have the residual debt insurance in a package with the loan for the conclusion and usually the providers also insist on the conclusion of a residual debt insurance before the conclusion of the lending business, unless there are adequate alternatives.

Criticism and disadvantages of residual debt insurance

Criticism and disadvantages of residual debt insurance

The consumer advice center often criticizes the amount of the premiums for the residual debt insurance and the coupling of lending with the residual debt insurance as a sales method. Often, taking out residual debt insurance involves relatively high commission amounts for the credit intermediary or the clerk at the lending bank. These not inconsiderable costs have a noticeable impact on the total cost of the loan for the borrower. Borrowers should also bear in mind that only a few banks take out residual debt insurance to improve credit scoring. If the lender prescribes the conclusion of the residual debt insurance so that a credit transaction takes place, then borrowers should make sure that the costs for this insurance must be legally binding in the annual percentage rate.

As a rule, it is up to the borrower to take out residual debt insurance with most providers. Nevertheless, the residual debt insurance is often advertised aggressively in order to earn final commissions. Residual debt insurance has to take further criticism with regard to the contractually fixed cut-off periods for the benefits. Some require that insurance coverage only comes into force after a contractually stipulated period has expired. Here experts speak of a so-called waiting time. Furthermore, some insurance contracts include a so-called waiting period, which means that unemployment or incapacity to work must exist for a certain period of time before benefits can be claimed.

Advantages of residual debt insurance

Advantages of residual debt insurance

An important advantage that exists with the residual debt insurance is that, unlike the individual insurance, there is no acceptance or health check. This ensures fast and uncomplicated insurance protection. Policyholders should, however, take into account that the vast majority of insurance claims due to the existing medical conditions known and existing at the time of conclusion are excluded from the benefit within the first two insurance years of the residual debt insurance. Protection in the form of residual debt insurance for existing pre-existing conditions in this time frame is either limited to the so-called non-pre-existing conditions, as well as reasons for the inability to work or the cause of death. In addition, residual debt insurance is a purely private law protection against the risks of unemployment through no fault of your own.

Important aspects of residual debt insurance

Important aspects of residual debt insurance

The insurance premium is payable with the residual debt insurance within a one-off amount together with the conclusion of the credit contract. The contribution is added to the loan amount. This automatically increases the cost of the loan. One should note the sum insured that comes into play when taking out residual debt insurance. Especially with long terms of the insurance and the loan contract, this can result in an enormous increase in the cost of the loan. Other providers provide protection that is too low for the loan amount. Experts therefore recommend that the content of the residual debt insurance be checked carefully.

The rule says that as a borrower, you should reject the offer if the costs take up more than ten percent of the loan amount. In addition, borrowers should ensure that if the bank takes out a residual debt insurance with a single premium, there is an obligation to include the resulting costs in the effective interest rate. If you decide to take out residual debt insurance, reading the fine print is essential. Protection can be excluded from the outset by the insurance company in the case of various previous illnesses. Other contracts do not take over until a three-month waiting period has been exceeded.

It is also important to know that there is no insurance for unemployment protection if the borrower cancels his or her employment contract or if this has existed for a limited period when the residual debt insurance contract was concluded. In all of these cases, the meaning of taking out residual debt insurance may prove questionable. An alternative could then be for the borrower to pay the amount that would have been due for the policy into a savings plan. This enables the borrower to secure important reserves and, in the best case scenario, saves him the opportunity to redeem the loan early.

Credit Bank – Opportunities for borrowing through the bank

 

 

If personal circumstances require borrowing, a multitude of factors must be taken into account by the interested party. Choosing a suitable loan agreement involves more than comparing effective annual interest rates. The fine print, as well as the financial situation and private planning of the loan applicant, have a decisive influence on the choice and the successful execution of the loan contract.

Borrowing from the bank

Borrowing from the bank

The banking system places high demands on prospective borrowers. An impeccable credit rating and a secure income are usually among the essential requirements for a positive credit decision. This means that many people are excluded from bank lending. But in addition to the banks’ loan offer, non-creditworthy prospects also have numerous options for borrowing. Private loans or loans from foreign banks are popular and proven forms of cheap financing.

The overdraft

The overdraft

A simple and quick way to increase the financial resources at short notice is the disposition loan. The overdraft facility is granted by the house bank as part of the current account agreement or the account holder explicitly applies for it.

The overdraft limit granted, and thus the amount of the credit line granted, is usually based on the regular monthly income of the account holder, which must actually flow into the checking account. The overdraft facility can be canceled by the bank at any time, but it is also possible to reduce or increase the granted credit limit. The overdraft facility, also known as overdraft facility or overdraft facility, can be used to respond to short-term financial bottlenecks.

However, the interest burden on the overdraft facility is relatively high, so that this form of financing can quickly become a ” credit trap “. If the high interest charges from the overdraft from the monthly available budget can no longer be managed, refinancing into a different type of loan is an option. The installment loan is usually used to replace the amount owed from the overdraft facility.

The installment loan

The installment loan

The installment loan is a suitable form of loan financing for orderly cash repayment and repayment in monthly installments. The installment loan can secure the liquidity of the funds to compensate for an overdraft or to purchase goods and services. This leaves the borrower with the option of also paying mandatory monthly payments, such as rent or energy costs.

Also known as a ” consumer loan”, the installment loan can be used for almost any purpose. The installment loan finances the car purchase, but also the vacation. From the furnishing of the home, the renovation of the bathroom, breast surgery or tooth restoration to recharging your batteries in the wellness oasis, there are hardly any limits to how you can use the installment loan. The amount and the term of the installment loan are among his most important selection criteria, because here the providers differ in their offers.

In principle, loan amounts of between 1,000 and 75,000 USD are possible with the taking out of an installment loan, whereby its term is usually between 12 and 72 months. As with the overdraft facility, the purpose of the loan application is usually to be specified, but is usually insignificant for the loan approval. This results from the fact that no collateral is required for the installment loan and it is therefore given as a ” blank loan”. However, the bank can request credit insurance (residual debt insurance) or a garnishment of wages and salaries if the borrower no longer meets his repayment obligations.

For people who are fundamentally excluded from lending, such as the unemployed, low-wage earners, the self-employed, and people with a negative Credit Bureau, a loan approval is usually still possible. In addition to the guarantee, the lender may also require residual debt insurance. However, the installment loan always offers much more favorable conditions than the overdraft facility. A processing fee of 1 to 2 percent is usually charged for its submission.

The credit line

The credit line

Similar to the installment loan, the framework loan is also an opportunity to be prepared for unforeseen financial burdens. The amount of the credit line is agreed, but its disbursement amounts are only paid on demand.

With the credit line, the borrower decides when and how much of the agreed credit line should be available to his account. The framework credit is therefore a permanent cash reserve that enables great financial flexibility. A usual credit line for the credit line is between 2,500 and 25,000 USD, whereby amounts of any amount – from 1 USD – can be called up flexibly.

Interest is only payable for the amounts actually paid, but not for the agreed framework. The credit line is also a cheaper option for financing than the credit line.

guarantee loans

guarantee loans

The lender can require the use of a guarantor for a large number of credit transactions. If the prospective customer does not have sufficient collateral available, the credit institution may request the provision of a surety to cover its risk.

As a guarantor, people who have the desired credit rating are responsible for the proper repayment of the loan. In the event of insolvency, but also if the borrower is unwilling to pay, the guarantor is liable with his entire assets. Even if the borrower has income or assets, the bank can fall back on the guarantor if the agreed loan repayment fails to materialize. The guarantee loan or the securing of an installment loan with a guarantor also enables people with little or no income to take out a loan.

The residual debt insurance as security

The residual debt insurance as security

With many types of credit, but especially with installment and guarantee loans, the conclusion and assignment of the residual debt insurance become mandatory for the borrower. As an alternative to the residual debt insurance, life insurance (capital or risk life ) may also be accepted, with risk life insurance only covering the death.

Capital life insurance may also have savings capital that can be used to satisfy the loan claims. The amount of the ceded security must ensure the proper repayment of the loan in the event of death, unemployment or illness of the borrower. The residual debt insurance and other accepted collateral are to be assigned to the lender, with which the insured person can no longer assert claims under the contract.

While the premiums for risk life insurance remain the same, the rates for residual debt insurance also decrease as the remaining debt of the loan falls. The more of the loan amount that has already been repaid, the lower the residual debt insurance.

The mortgage loan

The mortgage loan

Anyone who can use real estate to hedge the bank’s risk when borrowing is rewarded with more favorable loan terms. In most cases, the intended use of the mortgage loan is freely selectable, but in the case of specialized providers such as the mortgage banks, the mortgage loan is generally linked to the property. In this way, pure mortgage banks usually only finance new buildings, conversions, renovations and modernizations of a property.

A mortgage is entered in the land register of the local court for a mortgage loan. Rights from the property are thus transferred to the lender. When the property is sold, the lender is first satisfied in the amount of his claim, the remaining debt of the loan. The sale or transfer of the property can only take place with the consent of the mortgage bank registered in the land register. If the mortgage loan has been repaid in full, the mortgage is also deleted from the land register. Credit institutions, mortgage banks and insurance companies issue mortgage loans that are usually equipped with low interest rates and good conditions due to the high level of assigned security.

Suitable types of credit in the absence of creditworthiness

Suitable types of credit in the absence of creditworthiness

For those who cannot withstand a bank’s credit check, there are cheap alternatives for borrowing on the private credit market. The comparison of the loan offers on the Internet shows the options for obtaining a loan approval even if there is a low or low income or if the Credit Bureau is negative.

The personal loan is not subject to the legal requirements of banking, and other regulations also apply to foreign credit institutions. This means that people who are fundamentally not creditworthy, such as the self-employed, start-ups or low-income people, can be financed through cheap loans. The online comparison options as well as the online conclusion of loan contracts are simple, quick and transparent.

Experience report: 0% financing loan

 

The 0% financing is offered by numerous online shops and offline purchases in order to be more attractive to customers. The shops attract with monthly installments without any interest. Which conditions are linked to this financing model and who can conclude them? 

Zero percent financing for cellphone purchases via Agree Bank

Zero percent financing for cellphone purchases via Agree Bank

In August 2017, our editor bought a cell phone from the Agree Bank online shop. The Motorola brand device should cost 133 USD, it was a special offer. The shipping costs via DHL were 1.99 USD. The total amount thus amounted to $ 134.99, which was relevant for the financing.

After the mobile phone has been added to the shopping cart in the shop, it must then be registered using the e-mail address; an order via a guest account is also possible. Then the delivery type is selected as well as the payment method. The zero percent funding is given here. The annual percentage rate here is 0.0 percent.

Maturities with 0 percent financing

Maturities with 0 percent financing

As a customer, you have the choice between different terms. In this case, financing was concluded over 12 months, so a first installment of $ 11.35 uro and then monthly installments of $ 11.24 are due. The first installment is only due when the ordered product has been shipped.

Attention: This type of financing is only possible from a purchase value of 100 USD, with smaller amounts no 0% financing can be concluded.

The terms are between 10 and 33 months, so that a monthly rate for 0% financing is at least 10 USD. A credit calculator is available on Agree Bank.de, with which customers and prospective buyers can calculate their monthly installments without obligation depending on the purchase price and term.

Which bank is behind it?

Which bank is behind it?

Agree Bank’s zero percent financing is handled by Astro Finance. Astro Finance specializes primarily in car loans and consumer loans.

Consumer loans are usually granted in cooperation with trading partners, as in the case of Agree Bank. This type of cooperation enables retailers such as Agree Bank to benefit from higher sales, because this means of financing means that more people can buy a high-priced product.

Expiration of the 0 percent financing

Expiration of the 0 percent financing

After submitting the order, Agree Bank will receive an order confirmation and an email from Astro Finance. In this email you are greeted warmly and congratulated: ” Congratulations, your funding request has been approved “. Then you will be asked to complete the financing online. There are several options here:

  • WebID
  • Postident
  • market identification

The fastest way is the WebID procedure, here you only need a webcam or a computer or laptop with a functioning camera (smartphone with the appropriate WebID app is also possible) and an ID document.

Identification problems for loan completion

Our editor opted for apparently fast WebID procedures. A link takes you to the partner WebID. Information on name, address, age and telephone number must now be provided in an online form. After confirming the information, a video call is started. Here you sit opposite a WebID employee who checks the information. The ID document must then be held up in the camera so that a screenshot can be taken. Finally, the applicant receives a TAN, which he must enter. The following problems arose here: on the one hand the waiting time was more than an hour and on the other hand the employee complained that the camera was too bad and that he could not read the ID. Our editor was put off by the Postident or Marktident procedure and the WebID session ended.

Market identity and duration of the commitment

Since the credit application could still not be processed at Astro Finance, our editor decided on the Marktident procedure. The identity of the buyer and thus the borrower is checked on site in a Agree Bank store and the loan agreement is signed. This was done within 5 minutes at the Agree Bank service point. Agree Bank forwards the forms to Astro Finance. Once the application is confirmed, the borrower will receive an email.

Another problem arose here: It usually takes around a week from the application to the approval and shipping of the product. After more than 8 days, our editor still has no feedback from Astro Finance about the receipt of her documents. No one can provide information on the whereabouts of the documents when asked by telephone at Astro Finance, the responsible store or the Agree Bank online shop. After 2 weeks, the documents finally reach Astro Finance, the application is approved and the cell phone is sent. It is reasonable to assume that the long service life is to be blamed on the shipping service provider.

The Astro Finance Mastercard: serious or rip-off?

The Astro Finance Mastercard: serious or rip-off?

Once the zero percent financing has been completed and the product has reached the buyer, he will receive mail from Astro Finance again a short time later. Our editor also received two letters: one with a Mastercard and a second letter with a PIN. These letters are likely to cause confusion for some customers, because this card is never mentioned before the 0% financing is concluded, only in the small print. And here we come to the crux of the matter: The Astro Finance Mastercard comes as a credit card for the customer, who may be happy about this newly gained financial freedom.

Attention : Here it is advisable to read the documents really carefully and to check with the bank again if anything is unclear. The Astro Finance Mastercard is tied to certain conditions, which result in costs in the form of interest and are used as a means of payment. It is not advisable to use this card without care! The 0 percent financing from Agree Bank is actually free of charge, with no fees or interest. However, if the Astro Finance Mastercard is used in addition to this financing offer, there are additional costs.

The conditions of the Mastercard at a glance:

  • Availability limit of 3500 USD
  • 0 USD annual fee
  • 2.5% monthly repayment rate
  • Withdraw money free of charge from 300 USD

So here it becomes clear: The use of this card is not free!

Conclusion on zero percent financing

Conclusion on zero percent financing

Finally, based on experience, it can be said that the 0% financing via Agree Bank worked well and that it is a serious offer. The drawbacks that had to be made in the lengthy identification process are not necessarily attributable to the provider Astro Finance. The problems with WebID in particular can be attributed to outdated webcams. The financing was concluded and convinced by the favorable rates. The offer does what it promises – there is really no interest due. In this regard, 0 percent funding is highly recommended.

As already mentioned, however, customers should be aware of the purpose and the costs of the Astro Finance Mastercard sent to them. Anyone who is gullible about a free credit card that is suddenly in the mail will experience a bad awakening. If you don’t want to use the card, you can simply put it aside or destroy it.

Loan in training – financing for trainees & students

There may also be an increased need for money, particularly during training. Low or often even no income in training is the starting point in which you find yourself financially during the training. But there are also various ways of earning money during training, for example through the loan during training.

The loan in training

The loan in training

There is also a comprehensive need for consumption in training. Since apprenticeship periods tend to be longer and longer, apprentices are also getting older and so real realistic income only comes at a much later time than a few years ago.

However, trainees can also take out a loan during their training. To do this, two conditions must first be met. The trainee must be at least 18 years old and have a fixed income. For lending and the amount of credit, the higher the fixed income that a trainee has, the higher it can be.

The trainee must have a checking account in order for a credit transaction to be concluded. It is particularly favorable if the checking account is kept at the bank where the loan is also taken out. Trainees in particular often still live with their parents. However, the term of a loan is often very long-term. One should therefore already bear in mind when taking out the loan that one might want to move into one’s own apartment after completing the training and that these plans can be thwarted by a high credit with corresponding burdens of installments.

The loan should therefore be designed so that it can still be shouldered after training and with increasing monthly financial burdens. The amount of the loan during training is adjusted to the income of the trainee. This means that a trainee is only provided with a limited loan amount.

If the credit requirement is greater than the loan amount made available, the trainee has the option of providing a guarantor to secure the loan amount. In this case, the guarantor enters the credit agreement as the third contracting party and secures the credit with his own assets and income. This means that the guarantor has to undergo a thorough examination by the bank. This includes checking the income, financial obligations and also a Credit Bureau query.

Only if the guarantor also has an impeccable credit rating can he guarantee the loan as such. If a guarantor is provided, the loan amount can be extended to the highest possible amount for the guarantor. Even if the trainee has a Credit Bureau entry, a guarantor can secure a loan.

As a trainee, you should always bear in mind that your own income is still very low and that your own professional career is not yet fixed.

Important requirements for credit in training

Important requirements for credit in training

The basis for lending in the course of training lies in an employment contract and regular monthly income. It is also important that the trial period has already been exceeded during the training. Borrowing can prove difficult, especially when you have just started an apprenticeship. Here too, the position of a guarantor can improve one’s own situation.

Alternatively, you simply wait for the trial period to then apply for a loan. Not all financial institutions are willing to sign a loan agreement with a trainee immediately after the trial period, but some banks can.

Another important prerequisite for borrowing in training is that the trainee is of legal age. Only then will the trainee be fully legally competent and may also conclude effective loan contracts. The credit check is also common for loans in training. This means that the trainee is checked both with regard to his solvency and willingness to pay as well as with financial legacies.

The monthly income is used for the check. Then the monthly obligations are compared. A Credit Bureau test is also carried out. It is advantageous for apprentices when borrowing if they do not yet have to finance their own apartment, since this expenditure considerably reduces the apprenticeship remuneration and therefore also reduces the chances of a loan.

The Credit Bureau query is essential when applying for a loan in Germany. Especially for young people, a forgotten cell phone bill can have a negative impact on the Credit Bureau score. Anyone who has entries here will also not receive any credit during their training.

If the training allowance is below the garnishment limit, some banks often insist on the provision of a guarantor because of the impossible attachment in the event of a loan default. Banks often like to protect themselves here, especially if the income is below this garnishment limit during the entire training. Applicants should prepare for a limited loan amount during training. This is how banks prevent the loan default, but at the same time the applicant is also protected against over-indebtedness.

The loan amounts that are made available for the loan during training are between around 1,000 and a maximum of 5,000 USD. Trainees should exercise caution when it comes to aggressive online loan offers. Before a trainee gets involved in a loan agreement with very high interest rates due to the increased risks for the bank, it usually makes more sense to wait until after the training to start borrowing.

A specialty: the student loan

A specialty: the student loan

Student loans are a special form of credit in training. This is aimed specifically at students who are enrolled at universities and who must also prove this when applying for a loan by means of a matriculation certificate. The student loan is designed to make the student’s financial situation easier during their studies. In addition to studying, many students have to take on jobs to finance their education and living expenses. This in turn means that a student often extends his study time considerably.

Many credit institutions provide student credit for these students. In the case of student loans, in order to obtain this form of credit, it is first of all necessary to provide evidence that the applicant is studying, because these loans are often offered particularly cheaply and with special conditions. In the case of student loans, the applicant has the choice of whether the loan amount is to be paid out once or whether a monthly financial benefit from the loan is desired.

With a monthly payment, the borrower can get a precise overview of his finances and also has regular financial income. For the banks, the collateral for the lending results from the positive job prospects for students, which is why no evidence of income is usually provided. The Credit Bureau query is also carried out for student loans.

Another special feature of this student loan is that the borrower does not begin repaying the loan immediately after the first payment or even the payment of the entire loan amount. With this form of loan, the repayment of the loan is postponed to the time of study. Many banks also give the applicant a grace period, which means that payment in installments is only started three or six months after the end of the course. During this period, the banks see realistic opportunities for graduates to have an adequate job.

Student credit is a special form of student loans. The background for the lending for the banks here is that intensive customer loyalty to university graduates should be achieved already during the study period, who take up qualified activities after graduation, so that solvent customers represent the banks.

Mortgage and land charge as real loan – Use real loans sensibly

 

The real loan falls under the category “collateral in the context of lending”. In concrete terms, the real loan describes a loan that is supposed to reduce the risk for the lender with a certain type of collateral, namely with real objects. This gives rise to the term “real loan”, because security is a real-world thing that is also tangible. The form of the real loan is divided into real loans with movable objects such as cars or machines, and immovable objects, i.e. real estate, mostly land and buildings. The law also provides for some regulations for real loans. Real estate loans in the form of movable objects are also called “mortgage loans”, and collateral in the form of real estate differentiates between mortgages and land charges.

A movable thing as security: the security transfer credit

A movable thing as security: the security transfer credit

This form of real loan provides for movable property as security in the context of lending. As the lender, usually a commercial bank, is informed about what should be done with the money from the loan, a transfer of ownership is often agreed. This looks so that the borrower buys the specified item with the money from the loan. The borrower may keep this object and fulfill the corresponding purpose, he or she is now the owner of the object or thing. The ownership rights allow the object to be used for the intended purpose, but exclude other rights such as sales rights.

The lender becomes the owner of the thing or object. If the loan is repaid as agreed, the previous owner of the item also becomes the owner. However, if there is a default, the lender can exercise his rights as the owner and sell the item in order to settle his claims. This form of real credit is often used to finance motor vehicles, here the vehicle registration remains in the hands of the bank. The security transfer credit is popular because the difference between owner and owner is not recognizable from the outside when the loan is repaid correctly, and the borrower is hardly restricted when it comes to repaying the item as planned.

A moving thing as security: the mortgage and the mortgage

A moving thing as security: the mortgage and the mortgage

The mortgage and the land charge are also referred to as mortgages, but there is a difference between the mortgage and the land charge. The mortgage is entered in the local land register. The land register enjoys public trust, meaning that what is noted in it is considered binding. If the loan is concluded, the agreed property is entered in the land register as a mortgage. Similar to the transfer by way of security, the registered mortgage expires at the last installment, which makes the loan repayment complete. If there is no default, the property remains in the borrower’s possession all the time and can be used by the borrower. However, if there is a default, the debtor’s private assets are initially used when agreeing the mortgage, since the debtor is primarily personally liable.

If this is not enough to repay the rest of the loan, the property that was specified as a mortgage will be auctioned or sold, and the borrower’s real liability will apply. If the proceeds of the property are greater than the value of the remaining debt of the loan, the difference between the proceeds of the sale and the residual debt of the loan is paid to the borrower. The mortgage presupposes the existence of a claim between the borrower, who must also be the property owner, and the creditor, as the lender.

The mortgage stands in contrast to the mortgage. Just like the mortgage, the land charge is entered in the land register when a loan is concluded. If the borrower can no longer pay the loan, the property, which is encumbered as a mortgage, is sold or auctioned.

Here there is already a difference to the mortgage: While with the mortgage the borrower is personally liable with his or her private assets and only afterwards with the real liability of the property, the real liability alone is the real liability. If the mortgage does not default, however, the mortgage is not automatically deleted from the land register, as is the case with the mortgage. The mortgage is the abstract form of mortgages compared to an accessory mortgage. So if there is no longer a claim against the borrower, the property remains in the land register as encumbered. However, the borrower can no longer sue the property because he no longer has a claim against the borrower. This property is often used in reality by long-term contractual partners, since there is mutual trust and there is no longer any need to agree on security, since security is already in place, one speaks of the “land charge without a cause of guilt”.

Legal requirements for mortgages and land charges

Legal requirements for mortgages and land charges

Like all businesses in which land plays a role, a notarial certificate is required. The notary has the task of checking as an independent body whether everything is right. The mortgage and the land charge only exist when they have actually been entered in the land register. The information in the land register is absolutely binding. The legislator also provides that built-up and undeveloped property must be insured against damage as standard. In addition, the value of the property must be checked regularly as the value of the property can go up and down. A decline in value could be a toxic load on the floor or dilapidated parts of the building. Unexpected raw material discoveries can increase the value of a property, as can the development of the surrounding area. In addition, mortgages may only be concluded for commercial or residential real estate.