Who knows the situation that there is simply not enough money to fulfill a dream? An installment loan can remedy this fact. In contrast to overdraft facilities, installment loans are the cheaper form of credit and are suitable for purchases as well as for debt rescheduling. But how do you take out an installment loan and how do you recognize good offers?
The first question: What do I need the loan for?
Before filling out a loan application, you should carefully ask yourself the above question. Because there is a suitable loan for different situations. For debt rescheduling and small purchases, the classic installment loan with the usual conditions is definitely recommended. The classic installment loans are in most cases the more sensible alternative for debt restructuring or for the replacement of existing, long-term loans such as student loans or home loan.
But for larger purchases such as buying a car, new facilities for your own four walls or buying a house, it is recommended that you either get information yourself or have a more detailed discussion with the bank advisor. Especially for purchases such as cars or more expensive everyday items such as your own home cinema system, many specialist dealers now also offer special installment loans with very favorable terms that should be considered.
The second question: How do I get a loan?
To successfully conclude a loan contract, you need one thing above all: creditworthiness. The credit rating not only directly influences the conclusion, but also the interest rate and the repayment conditions. Lenders determine creditworthiness based on known data such as payroll, bank statements and Credit bureau entries. So if you can show an unlimited employment contract and do not have a negative Credit bureau entry, you have a good chance of taking out an installment loan at a reasonable interest rate.
But even for people with no regular income, negative Credit bureau entries or a high mountain of debt, an installment loan can be taken out at any time. The magic word for graduation here is: second borrower. A second borrower, also known as a guarantor, guarantees the security of the loan, so in the event of a liquidity bottleneck, steps in during the repayment phase itself. The same conditions apply to the guarantor at the conclusion of the transaction as for the first borrower. A little tip: with a good credit rating, the voluntary choice of a guarantor can have a positive effect on the interest rate.
The conclusion: An installment loan is worth it in most cases
Of course, this text cannot provide an overview of all aspects of an installment loan, but should provide a rough overview of the opportunities and risks to all interested parties. It is important to remember the above information well and to act accordingly. Before you finally sign, you should definitely make comparisons about the current offers and interest rates.