Actually, one would think, is a loan, with the exception of mortgage lending, always for free use. “Make your dreams come true” or “Fulfill your wishes now!” Are the slogans of the bank. But how do the banks want to know what customers want? Against this background, many borrowers assume that a loan for free use is standard. He is too, but there are exceptions.

The earmarked loan

The most common variant that dictates a particular use of the loan amount is car loan. Car loans are usually cheaper than a loan with free use. The car buyer must therefore prove within a certain period of time that he has acquired a vehicle with the money. This usually happens by sending the car letter. If the bank keeps the letter in hand, it is easy for them to sell the car if the borrower no longer meets his payment obligations. With a fitted kitchen this would be harder. This advantage in the realization of collateral is provided by the banks with interest rebates to customers.

Another earmarked loan is the “home loan”. This loan is only available to real estate owners for residential purposes. The advantage is that no liens have to be made. The interest rates for these loans are between classic installment loans and the interest on mortgage lending.

Finally, the loans remain at the “POS”, retail. These are directly related to the purchase of a product, be it furniture or a television.

The loan for free use – what to look for?

If you want to balance your account or go on holiday and need a loan, you will usually use a credit comparison to find the cheapest deal. The order is based on the cheapest interest rate that the provider identifies. But beware: If it is credit-sensitive interest, the order of the providers can move very quickly. The reason for this is the different weighting of the banks with regard to the creditworthiness criteria. Fall under it

• marital status
• private credit entries
• job
• Industry and employer
• revenue
• expenditure
• Alimony
• Other loans
• address

Especially at the address, the ratings of the banks are quite different. Some institutions also base their classification on how many loans were not properly served in their postcode or extended neighborhood. The applicant has no influence on this, but suffers in case of doubt. If the bank waives interest-based interest rates and offers interest to all, only the personal credit check is used.

Against the backdrop of interest-based interest rates, it therefore makes sense to ask a number of banks for a corresponding request. The time required is relatively low, on the private credit this has no effect. However, in most cases the customer already knows, within a few seconds after sending the request, what interest he has to reckon with which bank for his credit for free use.

Further selection criteria for the loan without purpose

The average duration for a consumer finance is 42 months, for a new car 62 months. It can not be ruled out that a borrower will have a greater amount of money to use for the full or partial settlement of his loan before it expires.

It is becoming increasingly popular for banks to forego a prepayment penalty, meaning that the customer does not have to pay a “penalty” for early repayment. The prepayment penalty amounts to one percent of the remaining debt for a remaining term of more than twelve months, and 0.5 percent in less than one year. Many institutions offer at least once a year that the borrower may repay a certain percentage of the remaining debt without compensation.

On the other hand, it may well happen that the borrower has a tight financial life. Classic times for young families is the time before the holidays or the pre-Christmas period. Anyone who knows before the signing of the contract that this situation is likely to occur, is well advised with a loan, which provides for contractual rate breaks. In this case, the borrower can easily pause for a month with the repayment of the loan without much fuss or negotiation with the bank.

Loan at your disposal – installments, maturities and loan amounts

The range of loans without purpose is quite broad. Some banks set a floor of € 1,000, others of € 5,000. Depending on the institute, the maximum loan amount is between 50,000 and 100,000 euros. For the maturities, in most cases, a minimum term of twelve months applies. A duration of 120 months as a maximum duration is rather out of line.

It is more convenient than a term of twelve months, if the borrower can choose his desired rate of credit for free use. The bank derives the term of the loan from this. More and more institutions also offer maturities of, for example, 33 or 57 months, ie a continuous repayment period.

Anyone who needs a loan of 12,300 euros, had until some time ago to clarify the question of whether he takes a loan for free disposal over 12,000 euros or over 13,000 euros. This is now a thing of the past for many banks, as they allow graduations in increments of 100 euros.

Debt complicates life immensely, everyone is aware of that. To eliminate them, it may make sense to take out a loan despite high debts.

But beware, the loan must be used for debt settlement. Otherwise, borrowing can become an additional burden.

Fast in the picture – overview

• Over-indebtedness does not forgive any bank
• Do not wait until it’s too late, you owe a loan despite high debts
• Which offer suits your personal situation is shown to you by the reference calculator
• For this you apply – of course without further obligations – just your desired loan

When is a loan worthwhile?

Credit despite high debts – get out of debt

Can with the help of the loan, the debt can be eliminated, its inclusion is quite justified. However, it is important then to find a financier who grants a loan under such conditions.

Not always easy, so a lot of tact and a sense of dubious offers is necessary. Especially the latter are very happy to be offered, if the need of those affected is particularly large and the regular banks do not want to grant credit.

A precise comparison and a balance is therefore essential.

When should be removed from the credit

A loan in spite of high debts should only be taken if it really brings a benefit. Often the debts are already so solidified that even a loan can not do much.

Even if many people wish this. In addition, often there is no money to cover the monthly installments for the loan. For debts often go hand in hand with unemployment or other drastic incidents.

Therefore, it must be carefully considered whether the loan can really work or not. If this is not the case, then a debt counseling service should be consulted to settle the debt.

The experts help, organize and bring clarity back to life.

Credit despite high debts – not without hedge

A loan despite high debts is always a big risk. Even if the debts have not yet made themselves felt in the private credit, they nevertheless represent a great financial and emotional burden.

A loan should therefore be taken only if it can be properly secured. A good hedge is based primarily on a guarantor or a second applicant.

He must be solvent and ready to take responsibility for the loan. For if the actual borrower can not pay the installments, the second person has to step in.

A good contact and a trustful relationship should therefore be given. In addition to the second person additional collateral can be provided.

If there is a fixed income, a residual debt insurance can be taken out. For large loan amounts with a long maturity, a term life insurance is sometimes useful.

Likewise, hedges in the form of capital-forming insurance, savings contracts and valuables are very welcome. However, whether such hedges exist with high debts, must be doubted.

Credit despite high debt – recording

Once all the pros and cons have been evaluated accurately, the loan can be put into action despite high debts. No matter if there is a negative private credit or not – the credit should not be taken on its own.

It requires a comprehensive hedge so that the loan is not too expensive and thus a debt trap. Our loan calculator helps to find suitable loan offers.

In the search, it is first of all irrelevant how high the debts are and how many people the loan is taken up with. The only important thing is that the loan amount is known and there is an idea of ​​what monthly installments are possible.

In that case, the maturity of the loan can also be determined. If a suitable offer is found, this can be included.

Here comes the second person as a hedge into play. She takes the loan together with the actual borrower, brings in the best case, a good credit rating and is liable for possible defaults.

Only then will the credit be able to achieve its full effect and to remedy the debt.