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
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
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.