Budget bill for credit – good monthly income alone

Only someone who is rated by the bank as creditworthy receives a loan. In order to be able to check and assess this, the banks first require the prospective borrower to provide proof of wages or salaries in order to be able to calculate the real net wages. But a good monthly income alone is not enough. Many other factors (how income is made up, monthly costs) play a role in lending.

Calculation of real income

Calculation of real income

For the calculation of the available monthly income, special payments, overtime or overtime can only be taken into account to a limited extent. After all, when it comes to lending, it is only interesting whether the regular income is sufficient to be able to meet your financial obligations. Likewise, all costs, whether for rent, utilities, living expenses, or possibly leases, must be deducted from this income and calculated to find out whether the rest is sufficient to cover the monthly credit installments.

The applicant may also be subject to a garnishment. This can also be seen from a payroll statement. Now the household bill for the loan that the customer has applied for from the bank begins.

How are household costs calculated?

How are household costs calculated?

In the so-called budgetary account, the bank’s clerk makes a list of both the positive income and the monthly costs of the applicant. However, it is a misconception that only rent, utilities or insurance contributions are included in this calculation. The daily cost of living must also be taken into account. After all, it is of interest to both parties whether the borrower is really able to pay the monthly installments due later.

Since the majority of applicants can hardly or not at all estimate these costs, lump sums are taken into account for the loan in the household account. These lump sums (whether for food, telephone costs, internet or personal hygiene or cleaning agents) are calculated by the bank employees, for the first person living in the household, between 650 and 700 USD per month. For every additional person living in the household, regardless of whether they are an infant or an old man, the household bill will charge 200 USD for a loan.

Since these amounts are quite high for the individual living in the household, it is not surprising that many loan applications are doomed to fail. With an estimate of 1250 USD per month for a household that includes five people, plus the normal rental and ancillary costs, the least wages are purely mathematically sufficient to also meet the liabilities in the form of monthly installments.

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Credit requirements for a positive credit decision

Banks check their customers very carefully, especially before they grant a loan. There are therefore a few prerequisites for applying for an installment loan in Germany. First of all, the applicant’s personal data is checked in order to check the legality of a loan agreement. In addition, the applicant’s financial status is of the utmost importance when applying for a loan.

Age of the borrower

Age of the borrower

In order to be able to make a positive decision about the application, the applicant must be at least 18 years old in order to enter into a legally effective contract. If this most important of all credit requirements is not met, the signature of a guardian or the parent is required. A person is only legally competent from the age of 18 (§ 104, 106 BGB).

In addition, age also plays a role. As a rule, one can assume that a boundary will be drawn from the age of 65. At this age, you are still fully legally competent, but at this age, coverage via residual debt insurance usually stops. So it should be difficult to apply for a loan at an advanced age, since the repayment cannot usually be exactly secured.

Prepayment penalty is due for early repayment

Prepayment penalty is due for early repayment

If it is an installment loan, a so-called prepayment penalty is due for early repayment. The amount has been capped by law for loans that were taken out after June 10, 2010. The compensation is based on the remaining term and relates to the remaining debt. In the case of more than twelve months, the compensation claim is 1.0 percent. Up to twelve months it is only 0.5 percent. Here one has to calculate whether the interest savings outweigh the costs for early loan repayment. Important: If the loan agreement was signed before June 10, 2010, the respective agreements with the bank apply and you should definitely speak to the bank to have binding figures on hand.

If the overdraft facility is to be replaced or the credit card account to be settled instead of an installment or small loan, there are no additional costs. You can save a lot of money here. Because an overdraft facility costs an average of around 10.0 percent debit interest. The situation is similar with credit cards with installment options. The installment loan is up to eight percent cheaper. This is noticeable on the account.

 

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