Compare loans online ¬ĽAdvantages and disadvantages of online banks.

Loans can be obtained from direct banks at much more favorable terms than from house banks. Conventional financial institutions are generally unable to offer conditions as favorable as direct banks. This is because conventional banks maintain branch networks that cause high costs. They pass this on to the end customer in the form of higher interest or credit costs to the end consumer.

Advantages and disadvantages of online banks

Advantages and disadvantages of online banks

These costs no longer apply to online banks , since they do not have a branch network and thus save personnel and space costs. Banking orders are only carried out online, by phone or fax. In addition, these institutes are not tied to opening times. The loan amount is also paid out very quickly after checking the documents. The disadvantage of direct banks is, of course, that there is no personal contact with an advisor. This disadvantage is more than made up for by the lower interest rates and lower loan costs.

Credit comparison with direct banks

Credit comparison with direct banks

However, consumers should also make a loan comparison with direct banks, e.g. B. on online bank before deciding on one of the many providers. A loan comparison on a comparison calculator on the Internet is quite simple. The customer selects the loan amount and the term, and the calculator shows the cheapest providers in a matter of seconds. Many computers also offer the option of entering the intended use for the loan. This also ensures a better selection in the search results.

Credit decision criteria

Credit decision criteria

Those interested in credit should pay particular attention to the effective annual interest rate and the possibility of early repayment of the loan. The APR is the only amount that credit can really be compared to. The annual percentage rate includes the borrowing rate and the processing fee. It is expressed in percent.

The possibility of early redemption without prepayment fees is also an important decision factor. If you want to redeem a loan with a term of 10 years, perhaps after 5 years without a prepayment fee, this option must be agreed in the loan agreement.

Another point to consider for the borrower is the credit dependency of the effective interest rate. The cheapest interest rates are only available with a good credit rating. Therefore, the customer can also search specifically for credit-independent credit offers with fixed interest rates.

 

Budget bill for credit

Anyone who has ever wanted to take out a loan is probably familiar with the household accounts of credit institutions and banks. With this calculation, the banks check above all whether the borrower can also afford the desired loan, that is, can pay from his income. So it is the bank’s safeguard not to give financial benefits to people who cannot repay them.

Which documents are required

Which documents are required

The banks request some documents from the applicant to check the creditworthiness. First of all, of course, this is proof of income. So the pay slip or the last three pay slips. In some cases, confirmation is also required that the borrower has no fixed-term contract.

The three consecutive salary slips also show the bank advisor on the household bill for the loan whether a garnishment has already been attached. Which of course is an exclusion criterion for lending. A copy of the ID card can also be requested from the banks.

What happens then

What happens then

The bank advisor then compares the income with the expenditure. In other words, it lists which expenses, such as rent, car, insurance, maintenance, food, etc., have to be deducted from income. For example, many people cannot quantify their monthly expenses for clothing, groceries, household insurance, telephone and internet, or only very inaccurately. For this reason, the banks apply a lump sum for this. This is between 650 USD and 700 USD per month.

If more than one person lives in a household, a flat rate of 200 USD is added for each additional person. The banks do not consider whether they are adults or children who live in the same household. Because the demands and living habits can change over the years in which the loan runs and there must also be enough money available for living for several years. In many cases, lending already fails at this point, because the cost of living, which the banks have set relatively high, is not attained by many borrowers.

If all the required criteria of the banks have been checked positively, in most cases there is nothing standing in the way of lending. If the mandatory credit bureau information does not produce any negative entries, the loan amount is paid to the borrower. The budget bill for the loan should, however, be filled out honestly or discussed with the bank advisor. It is of no use to the bank or the borrower if the installments can no longer be paid in the end.