Apply for a credit line before (!) instalment loan – plan the financings of your life strategically!
Just like it is meaningful to build asset with a strategy, it is meaningful to build financing options strategically for life.
Never heard of it? No wonder. As in any area in life, there is also little known, partially hidden knowledge when dealing with the personal finances. In our circle of smart bank customers, we reveal such knowledge little by little and share it with you!
There are good and there are bad times for the application of a loan. You can surmise the result!
In this article, you find out how and when to set up a strategic credit line. With the last practical example, you also get a solution for the case, if the “child already fell into the well”!
Why apply for the credit line first?
The answer is simple:
- An existing instalment loan has to be stated when applying for a credit line
⟹ lowers the chances for success!
- An already existing credit line is not stated when applying for an instalment loan
⟹ chance for success stays the same or has even been increased.
See also: Differences between a credit line and an instalment loan and Creditworthiness building with credit lines.
Why is that so?
A credit line is no different from an overdraft facility.
Just without a current account.
… and in most cases even at another bank as the one where you have your current account.
This is due to the fact that only very few banks offer a credit line. The reason for that can be found in the general terms and conditions of a credit line:
Setup of a permanent credit line
But no obligation to “take the loan”. You can set up the credit line e.g. only as an emergency credit line. The bank only earns through the loan interest – so only, if you use your “overdraft facility”.
Quite high credit line is possible
A credit line does not have to be repaid within a certain term. One can theoretically, but also practically, take the full credit line of up to Euros 25,000 and only pay the interest for decades. Although the loan debt stays the same, but the monthly burden (instalments) is super-low.
Super-low, because no repayment is included in the instalment. An instalment loan is calculated to a certain term, after which the loan debt is repaid until zero. This is why the monthly instalment is considerably higher.
Current monthly instalment for a credit line at the ► ING-DiBa:
Loan Euros 1,000 Euros 5,000 Euros 10,000 Euros 25,000 Interest Euros 4.86 Euros 24.29 Euros 48.58 Euros 121.46
Important to know: For the granting of a loan, the general creditworthiness is important (Schufa-query) on the one hand, and on the other, whether one can afford the monthly instalments.
With only Euros 48.58 per Euros 10,000 loan amount, it is a very comprehensible amount, which one must have in the monthly household budget (household expenditures).
If one would take an instalment loan at the same bank with a term of four years, then the monthly burden is already at Euros 223.69 per Euros 10,000 (although the interest rate with 3.59 per cent is more favourable with more than one per cent!)
There are people, who cannot afford a cheap instalment loan, but a credit line, which is 1.4 % more expensive!
Please think about that for a second and enjoy.
By the way: The federal republic of Germany manages its debt (or ours?) according to the same principle: high loan amount at minimum interest; hardly a frequent repayment, but debt rescheduling. Result: excellent creditworthiness!
Quite cheap interest rates
The interest rate varies and adapts to the general interest level. It is currently and was in the past years below the interest rates of most overdraft facilities of current accounts.
At the ING-DiBa, it is at only 5.99 per cent at the time of publishing this article.
Absolute flexibility for you, being a smart bank customer
There are no special repayments, because they are not even necessary!
You get an online access to you own loan account. You can login anytime and transfer money by yourself from the credit line account to the current account (reference account).
You can make deposits anytime, set up a payment plan or a standing order from your current account to your loan account for the voluntary repayment.
If you do not do this, then only the cheap interest rate (currently Euros 48.58 per Euros 10,000) is debited automatically and monthly from the current account. Of course, only for the days and for the amount that you actually took advantage of the loan.
If you did not use the credit line, then there is no debit payment.
You can get the payment of Euos 10,000 today and repay it tomorrow. This fun would have cost you Euros 1.62 interest = who borrows Euros 10,000 from one day to the other, only pays Euros 1.62 for it.
Only Euros 1.62 per day!
Open-minded readers can recognize the huge potential of this genious option! We will get to the strategic possibilities of use in the further course of this article and very intensive in the ► Achiever-Training (German).
At which bank can you get the credit line?
If you think about the general conditions, you will easily determine that this is very favourable for us bank customers, but an only difficultly calculable business for the bank.
This is the background, why only very few banks offer credit lines or call loan (= other term for the same thing).
Of the few providers, who do that, there are only two that are actually recommendable. These are the Volkswagenbank up to Euros 8,000, if you want to use the credit line immediately, and the ING-DiBa. The VW-Bank regularly has a discounted interest rate for the first 12 months.
We have also tested other providers in the past years, which we do not want to mention here, because we focus on solutions for our readers that work permanently!
As a keyword for you: What good are good conditions in the price listing, if the bank cancels the credit line, because of a too low use? The VW-Bank and the ING-DiBa do not do this. Within our family, we have left the setup credit line for years without use and it is callable anytime, today as on the day of credit line approval. Great!
If you want to build a credit line strategically, then it is recommendable to go directly to the ING-DiBa. The Euros 25,000 are comparably easy to get there, as documented for your here: How I got € 25,000 immediately … you can do it too!.
In contrast to the VW-Bank, you do not have any automatical repayment at the ING-DiBa, if you do not want to. At the VW-Bank, it is 1 per cent of the setup credit line, so Euros 100 per Euros 10,000.
If I would start anew today, to build credit lines and financing options, then my first step would be the application for a credit line at the ING-DiBa in the amount of Euros 25,000.
“Set up a strategic credit line”
At best immediately Euros 25,000!
… and my friends do as I do!
The strategic building of a financing(-option)
Even if I do not want to finance a certain object – e.g. a used car – then I would get a pretty big credit line before the car financing.
As long as I do not use it, it does not cost me anything!
This is the reason for the title “Apply for the credit line before (!) the instalment loan”.
If you do it vice-versa, then it can be that you do not get the credit line anymore, because too few disposable capital is determined in the household expenditures. Perhaps not in your case, but we have millions of people in our society, who really have to “calculate” to get to the end of the month.
Please remember the following:
A credit line works according to the overdraft facility principle!
After successfully getting the credit line, you apply for the instalment loan for the object to be financed. Staying with the example “used car”, you go to the loan comparison especially for car financing, in order to get the most favourable interest rate.
In the best case, you conclude a cheap instalment loan and the repayment works flawlessly.
If there will be unexpected financial burdens in your life, then you have the possibility to pay the instalments for your instalment loan from the credit line. You have cleverly already set up your own emergency option.
If no instalment loan should be granted – for whatever reason –, then you can use your credit line (transitionally).
- Setup of the strategic credit line
Recommendable provider ► www.ing-diba.de/rahmenkredit
- Apply for the instalment loan with a favourable interest rate
Comparison ► Loan comparison for instalment loans
Anticipatory set up of the credit line
Our frequent readers probably know since long that one should apply for financing or the option for it during financially good times and not until one needs the money urgently.
However, one can go even one step further: apply for the credit line before a professional change of status. This is smart and anticipatory!
… like you will find out now in the case example.
Case example 1:
Make the credit line ready before a professional change
She has a daughter, Lisa. Lisa is 9 years old and had a health challenge for a long time. She experienced a permanent improve outside the conventional medicine.
Getting there, was a long path for mother and daugther, which lead them to many “experts”, speeches, technical literature and trying a countless number of products.
In the meanwhile, Anna is well versed in this special area and is asked for advice by her friends and acquaintances.
On the sideline, she joined the company that issues the product line, which has helped her daughter to get a permanent improve in her life.
Borne by this success and the positive feedback of others, she thinks about building the sideline business further and perhaps aspiring the training of a non-medical practitioner. In turn, she wants to cut back her main job, perhaps give it up completely in two or three years and implement the dream of an own office, maybe in cooperation with others …
*** Cut ***
Now is exactly the right moment to set up a strategic credit line!
With her permanent job, Anna has the right requirements for applying for the credit line … You know: organise the credit lines in “good” times.
Even if she could only need the money in a year, it is meaningful to set up the credit line now, because:
Once set up, there is no further check!
This is why you should apply for the maximum amount of Euros 25,000. Even if you do not need that much money from your current perspective. If you “only” apply for Euros 10,000 and want to increase it later on, a new loan check will be implemented at the time of increase!
… and if you are not in a permanent employment relationship, but like in the case of Anna a business start-up, then it is a less good moment.
If the credit line is approved, you do not need to report changes of the professional status. It does not matter, whether you will be a self-employed, entrepreneur or even become unemployed! The credit line will remain!
You only pay interest for what you use
Plain language: If you do not touch the credit line, then it is free for you!
In Anna’s case, interest would only apply, if she would e.g. buy business equipment for the office. Of course, she would only do this, when expecting income with which she would be easily able to pay the cheap interest rates.
Having the credit line in the backhand, one can start the talk about a loan for business start-up completely relaxed, if one still needs it at all!
The use of the credit line is free to choose!
It makes soooo much sense to set up the right credit lines for ones potential in life strategically on time.
Case example 2:
What to do, if “the child already fell into the well”?
She hopes that we can help her to organize a financing.
By accident, she found out of a new device that originally comes from space technology, which helps people to regenerate faster and to decelerate. People, who have “relaxed” in this device, react much better and sustainable to her non-medical treatments.
For her customers, she wants to buy such a device and place it in her office. For this, she needs a five-digit amount.
She and her partner have calculated everything: Even if she would use the device to only 30 per cent, it would be easily possible to repay a loan through the usage fees within a comprehensible term.
However, their application of loan was rejected by their main bank. Their requirements are not optimal, because:
- banks do not or only hardly finance freelancers or self-employed persons;
- their income, even if it is quite good, can only be evaluated with difficulties, because it is still in the first three years of start-up;
- her husband does not help a lot as the second person in the loan application, because he is also a business start-up.
Many know that one can apply for a loan together with somebody else. One can see that already in the online form. Most loan applications are made with two borrowers and by permanent partners. This idea does not apply to Bärbel’s case.
What many people do not know, is that one can enter any person as the second borrower!
This is also the solution for Bärbel.
After she had read this here, she made a list with names of persons in her closer environment, who would perhaps help her. As she knew that it did not have to be persons from the family, she also included good friends and acquaintances of whom she knew that they had a permanent job.
Then, everything was very easy.
She could win her brother for the application of the credit line.
At first, he was skeptical, whether this would work, because he had concluded a real estate financing since short, but after a consultation with the team of DeutschesKonto.ORG, both found out that a real estate financing does not have a mentionable effect in the expenditure account when applying for a credit line. For the living costs, one pays either rent or the instalment to the bank.
Existing real estate financing is not harmful!
On our recommendation, her brother was entered as borrower 1 and Bärbel as borrower 2. Often, the first borrower is checked “stricter” than the second one.
As a reference account, the account of Bärbel was submitted. The payments are transferred there and at the 30th of every month, the debit of the interest rate takes place from Bärbel’s current account.
Besides signing the online application and the statutory legitimating, Bärbel’s brother has no effort with the bank. He is glad for this. It was paramount for him to help his sister and the execution of application, payment and the automized interest debit order was super-easy in retrospect.
The happenings were good for everyone:
- Bärbel’s customers get a better treatment.
- Bärbel earns additional money with this device.
- The bank also earns through Bärbel’s interest payment.
With the right background knowledge, every financing is easy!
… and we can make our world a better place together!
Questions and experiences as usual through the comments feature, many thanks!
- Step-by-step to the credit line (instruction)
- Experiences to the credit line of the ING-DiBa
- Setting up the credit line cleverly – Part 2
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