For the amount of interest, the term of a bank loan is an important factor: for example, if you choose a shorter term of a loan, you pay less interest. After that, a loan is required. The advantage of online loans, for example, is that they can be completed very quickly and with little effort. The annual effective interest rate of a loan is all the higher, the higher the fees or the interest payable during the term of the loan. Favorable conditions, quick engagement and standardized conciliation procedures – the online credit is in no way inferior to the lending by the branch bank.
When a loan is claimed and processed over the network, it is an online loan. Some credit institutions also call the online loan immediately or directly loans. The borrower usually spares time and time through favorable interest rates. In addition, an online loan can also speed up the distribution of the loan amount.
The processing of an online loan is done exclusively via the web, which is clearly different from conventional loans. Online loans are granted through so-called direct banks, which do not have a branch network. This saves the direct bank considerable sums, so that these borrowers often have very favorable interest rates. There are only a few steps needed to make a loan application.
In a mask, the borrower enters only key data for the desired loan, such as information about the job situation and the monthly income. Some online banks are also asking for civil status. After the application, the relevant house bank checks the data of the customer and at the same time checks whether the loan can be awarded.
As a rule, it is decided within 24 hours whether the borrower receives the order or not. All provisional loan documents will be sent to the borrower by e-mail or by letter if the check is positive and the loan has been approved. The borrower returns the printed documents together with an identification, eg via a postident procedure, to the financing banks.
Find out about the identification process
Many banks that provide online loans do not put the buyer directly on terms. The vast majority of online loan offerings are variable and offer the borrower the option of unscheduled repayments or repayments. The lenders are usually available 24 hours a day on the Internet and are therefore not subject to normal banking hours.
Compared with branch contracts, this usually means faster processing of the online loan. But the debtor’s credit check with the Credit Bureau query is no less bureaucratic than with conventional banks. In addition, online financial institutions can make substantial savings due to the lack of a branch network and can often provide borrowers with favorable interest rates.
Because an online loan not only has to be settled quickly, but often has to be repaid quickly, a long-term partial payment is not possible. Therefore, many banks grant a maximum repayment term of 72 to 84 years for their online loans. For small to medium sized loans, an online loan is optimal as the maximum loan amount is often 50,000 USD.
Loans to cover real estate financing are barely taken up via online offers. Another danger when taking an online loan is the lack of personal address. Although some banks offer consultation via a telephone hotline, there are many providers who do not offer this. Interested online borrowers should therefore be fully informed about the different ways of lending on the Internet.
When you make an online loan for a major purchase, you should first be aware of the terms and conditions of the offer. Private lenders and large credit institutions often promote instant loans at particularly favorable rates. On the other hand, medium-sized borrowers, in some cases above 10 percentage points, have to raise their share of the market, irrespective of the ECB’s key interest rate or the average interest rate on the market.
Considering the large number of annuity loans that can now be taken on very different terms, consumers should carefully consider whether online credit is essential. Basically, if the buyer is able to repay the loan quickly, an instant loan is just as well suited as an overdraft because it can save on processing fees and other costs.
However, the amount borrowed should not exceed two to three net monthly salaries in order not to break the bank’s planning framework. In this case, the borrower should be restrained, as default interest for a disproportionate overdraft can increase the dispo interest rate up to 15%. Therefore, it is always useful to look at the conditions of the various providers in detail.
What are the most attractive conditions?
The level of interest rates on an online loan is heavily dependent on the borrower’s creditworthiness. The Institute determines this by first requesting information from the Credit Bureau. In addition, the so-called screening is used, in which the potential debtor is classified. However, the conditions for an online loan can be favorably influenced by the choice of a suitable fixed interest period.
As a rule, if interest rates are currently generally attractive, this should be ensured by the widest possible fixed interest period. In addition, it is advisable to set the highest possible repayment installments in your own financial framework. For the contract comparison, the many loan calculators on the intranet. Thus, the client can not only effectively evaluate different long-term planning loans, but also distinguish fast advantageous online loans from expensive offers.
After all, the individual online loans are often similar at first glance. The borrower can use special types of calculators to determine the loan amount, the term, the expected interest and other variables. Although this loan is usually only a short financing option, it can take years to pay off the remaining debt.
When using a credit calculator, therefore, a number of things must be considered. On the one hand, the borrower should go over several conditions of the individual loans in detail, as there are many questionable offers, especially in the online area, which turn out to be such only on closer scrutiny. It is particularly recommended to submit the loan application from the beginning on the basis of realistic information.
Anyone who overstates their own budget can be in arrears after just a few months’ deduction and have a lot of punitive interest. The repayment calculator can then be used to play back individual repayment variants so that the consumer can exactly assess which ones can cope with their own professional situation. In particular, borrowers with relatively low interest rates should consider various options and set a higher initial repayment amount against the background of current loan interest rates.
For example, the following aspects should be checked: Also, many instant loan providers use online computers on their network presence for quick billing. Special care is required for the client, since for a more attractive image of the loan offer is not always considered all fees incurred, so only the debit interest, but not the effective interest are included in the bill and a TÜV-audited bill is not made in most cases,
It is therefore advisable to use an independent creditworthiness calculator for the reconciliation.