Consumer credit – as versatile as your wishes
You want to move, buy new furniture for your living room, marry or fulfill another long-awaited wish? As a consumer, you have various options available to realize certain dreams financially. One of these is consumer credit, which banks lend to private individuals. Thanks to its monthly flat rate, it is easy to plan and will get you there quickly. Consumer credit – what exactly is it and what should be taken into account?
What is a consumer credit?
A consumer loan is a bank loan that is provided to households in the form of an installment loan. Therefore, consumer credit is often referred to as personal credit. For what the loan is ultimately used, the respective consumer is free (except real estate purchases), so it is not earmarked. With the 1822direkt the installment loan from 2,500 to 50,000 euros is offered to you (the lender is the Frankfurter Sparkasse as the parent company of the 1822direkt). The consumer therefore receives a loan for a certain amount of money, which he has to repay on pre-agreed terms in usually monthly installments. Together with the bank, the amount of the installment payments is determined, which depends on the current interest rates in connection with the creditworthiness of the customer, as well as the duration of the loan. The duration is usually between 12 and 84 months (the 1822direkt even offers up to 120 months). As security, the consumer usually has to submit a salary assignment to the bank. This means: If you default on one or more installment payments, the bank has the option of deducting the installments directly from your wages or salary.
The requirement to receive a consumer credit
- You are of legal age, have a good credit rating and use the loan privately and not commercially.
- You can use your credit freely. However, there is one exception: real estate, ancillary costs of real estate procurement or renovations are not financed.
- They act on their own account.
- They have a regular monthly income from self-employment – as an employee, worker, civil servant or pensioner / retiree.
- You have your main residence and work place in Germany and a German salary checking account.
- If you apply for the loan with a second borrower, it must be your spouse or your significant other – you live with him at the same address
The benefits of a consumer loan
- Good planability: The amount of the installments remains the same throughout the duration. It can thus be well planned by what time which amount has to be repaid monthly.
- Special repayment: Through a special repayment, you can also make deposits during the term, so that you can repay your loan faster. The 1822direkt even offered for free.
- Flexible Use: Since consumer credit is not earmarked, you have many options for what you can use it for (except for real estate purchases).
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The risks of a consumer loan
- Danger of over-indebtedness: Since consumer credit is relatively easy to have, one may quickly tend to borrow more. However, it is often not considered that the living conditions can change. A change in the income situation can then become a problem if you can not repay the outstanding installments on time and threatened with over-indebtedness. As a result, you would get a bad rating with the Schufa, which may mean that you will not get credit even years later, even if it would allow your financial situation again.
- Additional costs: When you take up a installment loan, you must always keep in mind that you will not only have to repay the sum you have raised, but also add the borrowing charges.
What else is there to pay attention to consumer credit?
Effective interest rate
In connection with the conclusion of a loan, of course, the amount of interest is crucial. It depends on the current interest rate phase. If the interest rates are currently at a high level, it is generally worth a short term. In order to make a lucrative loan, you should first and foremost look at the APR. With this you can plan in detail because it includes all relevant costs. In addition to the current interest rate, this includes, for example, agency costs, or costs for optional residual credit insurance.
Payment protection insurance
If you want to protect yourself or your loved ones, you can do so with a residual debt insurance. Such a close in connection with the installment loan. In the event of death, inability to work or unemployment, the insurance would then take over the outstanding debt of the loan.