There are three requirements that must be met in order to obtain a loan in Germany:
- One must be at least 18 years old
(important for the full capacity),
- One must have an address in Germany
(important for the creditworthiness check)
- One must have a regular income
(important to pay the interest and repayment).
There are several types of loans that we will present at the end of this article. Below that, you will have the opportunity to ask questions online, that we gladly would like to answer. Now, we present the three best ways to obtain a loan in Germany.
1. Bank loan
To get a loan from a bank is the usual way. The most common form of a bank loan is called consumer credit or also instalment credit.
With this, one can make financing of any kind, for example, purchases for the apartment or a holiday trip. One does not have to provide proof of the use of money to the bank.
The amount of the loan is transferred to a bank account. The monthly mortgage payments will also be deducted from this bank account.
We describe the conditions based on the most demanded bank of this special portal, the DKB:
- Flexible loan amount between Euros 2,500 up to 50,000
- Flexible loan period between 12 and 84 month
- Current interest rate 3.89% (annual percentage rate (effektiver Jahreszins), further details about the interest rate can be found on the website of the bank).
Notes on the interest rate
In the interest rate, there are two groups of banks in Germany. Some offer an interest rate depending on the creditworthiness (bonitätsabhängiger Zinssatz). This is good for people with high credit ratings, as they will have to pay less interest rate, however, bad for people with lower credit ratings. They will have to pay a higher interest rate.
The DKB offers an interest rate that is independent from the creditworthiness. Therefore, the interest rate of all borrowers is the same.
The car loan is a special form of the instalment loan. As the vehicle provides an additional security for the bank, the interest rate is cheaper in most cases. Go directly to the ⇒ Providers of car loans.
2. Loan from private persons
In Germany, there are two online platforms through which you can get loans from private persons for private persons. Here you can find a TV report about this:
Key messages of the TV report:
- One has to state exactly the same information about the person and the financial situation as in a bank financing.
- However, not a single advisor decides at a bank and no bank computer, whether the loan applied for will be granted.The loan application is accessible as an investment opportunity for thousands of private investors. They can participate. Instead of the bank, the private investors receive the interest rate.
The chance to obtain a loan through one of the two platforms is greater than when only applying at a bank – especially, if you do not have AAA creditworthiness.
Often, not only one private person finances the credit request, but several investors pool the money on a „credit project“ together and divide this way the risk (loan loss) and interest rates (profit). This is a great form of bank-independent financing!
These are the corresponding websites:
3. Loan broker
At a loan broker, one states exactly the same data about the person and the finances like at a bank. The advantage of the loan broker: he/she selects the right bank for the loan request based on his/her experience, or asks several banks for the best loan deal.
In the following video clip, the operating principle of Bon-Kredit is explained. Bon-Kredit has established itself as an online loan broker in Germany since many years.
In addition to German banks, Bon-Kredit cooperates with foreign banks that provide loans in Germany. This is the background, why Bon-Kredit can also offer „schufa-free credits loans“.
In a schufa-free loan, the creditworthiness of the customer is checked, but not through the Schufa-query (credit investigation company). Additionally, a loan from a foreign bank that has no cooperation with the Schufa, does not appear in their information file.
What is „Schufa“?
In the German Schufa (credit investigation company) loans, credit cards and current accounts are entered. The Schufa is a creditworthiness agency, in which most people living in Germany are collected. German banks check the customer based on the Schufa data before any current account opening and before any loan approval.
4. The short-term loan (e.g. 30 days)
The provider Vexcash has brought the new form of short-term loan to Germany.
In Great Britain, this form of bridging financing is used successfully since some time now and is accepted gratefully by people, who want to borrow a smaller amount until the next salary payment.
New customers get up to Euros 500 in loan. If one repays it within 30 days, then one can get a loan of up to Euros 3,000 as an existing customer and repay it optionally in instalments.
How the short-term loan at Vexcash (Germany’s first and biggest provider of this form of loans) works and to what you should pay attention to in order to have low costs of the loan, we have summarized here: VEXCASH ⇒ Money on the same day!
Loans in Germany
In Germany, one can distinguish several loan types:
- Consumer credit
Also known as instalment credit. One does not have to state the purpose of the loan to the bank. This type of loan is often used to buy things for the apartment or to go on a holiday trip.
New: Loan comparison with calculator tool!
- Car loan
Usually, a more favourable interest rate as for the consumer credit, as the purpose of the loan is mentioned and the car is a security for the bank.
New: Loan comparison specifically for car financing!
- Overdraft facility
Credit line of a current account: One can „overdraw“ the account up to a pre-agreed limit
- Credit on credit card
One can go shopping or withdraw from the ATM and collect all purchases for months on the credit card account … however, the interest rates are particularly high for this. One of the well-known providers with the highest credit lines but not too strict creditworthiness check is Barclaycard.
- Securities loan
One has a securities account with stocks and funds at a bank. These securities are deposited as a security for the bank. The loan is usually favourable and is usually not entered at the Schufa. The money can be used for all purposes. The Comdirect offers securities loans.
This is the cheapest loan to buy a house or an apartment. The property is a security for the bank.
- Loans for self-employed and companies
Here, the risk for the bank is the highest and therefore also the interest rate is often higher than for loans for private persons. In this form of loan, German banks are generally more cautious. However, we are already in contact with a foreign bank that wants to offer loans to entrepreneurs in Germany in the future, and we will report in detail about it.
- Short-term loan
The easiest and most favourable form is the loan for 30 days. One gets up to Euros 500 as a new customer and has 30 days to repay it. This is helpful for many people. If one needs money more often, one can get several possibilities and higher amounts as an existing customer. Further information here.