What do modern loans for private and professional purposes look like?

From installment, annuity and mortgage to repayment loans: there are numerous ways to adapt the mortgage to individual needs. Finding yourself right in the variety of loans is not always easy.

Whether in private or professional matters: growth costs. For companies, these are mostly resources, plants and machines, as well as locations that mean high costs. In private, there is often a change in the living situation in the form of building or buying a house, which is realized with a loan. Modern and flexible solutions for financing at suitable conditions are therefore more in demand than ever.

 

Digression: Development of the amount of lending from 2014 to 2017

According to the banking association, the total amount of loans granted to private individuals as well as to companies and self-employed has risen continuously in recent years. From 2014 to 2017, the total amount of private loans rose from USD 1,078.6 billion to USD 1,192.3 billion. For companies and the self-employed, the amount rose in the same period from 1,291.6 billion to 1,403.1 billion dollars. Loans were mainly taken over by credit banks, savings banks and credit unions.

This division is interesting because despite the continuing branch extinction and merger pressure, a large number of companies still rely on the house bank. Loyalty to the house bank is a traditional and strong concept, especially for small and medium-sized enterprises (SMEs). The reason for this is that good payment behavior and well-known liquidity development result in credit advantages for the company. Private individuals, on the other hand, tend more towards financial institutions that specialize in lending and often leave their house bank out.

 

Popular and current loan types for home finance

Popular and current loan types for home finance

There are basically two classic types of mortgage loans. These include the repayment loan and the annuity loan. Both models are popular, but differ in some ways. Here it is not always easy to keep an overview or to recognize which loan best suits your own life concept.

With an independent companion like VIST, it is possible to compare offers from over 400 banks with one another in order to receive individual and tailor-made construction finance. In addition, the financing expert provides practical tips and understandable information on the most important subject areas, for example here, on the topic of annuity loans. It is also possible for laypersons to easily understand and apply for annuity loans.

The annuity loan is so popular with construction and real estate finance because the monthly rate remains the same. It is a safe and manageable form of loan, which is why it is used most often. While the monthly payment is basically constant, the relationship between interest and repayment changes over time. The latter is increasing.

The annuity loan is possible in various forms:

  • variable loan with a monthly rate that changes every three months
  • committed loan with an interest rate that remains for an extended period of time

It is also possible to specify special repayments or a repayment rate change in the loan agreement. Other types of loans include:

  • Installment loan : This is another popular loan model. In contrast to annuity loans, the rate decreases over time due to the decreasing interest burden. For this reason, many refer to this loan as “installment repayment”. The counterpart to this is the “final loan”. A repayment is planned for the end of the term with the full amount. By the way, the installment loan is often grouped together with the annuity loan under the generic term “repayment loan”.
  • Personal loans: This variant is an investment by private individuals. Family members are often considered, especially if the equity capital is either insufficient or not available at all. What is important here is a particularly good relationship of trust with each other. Unlike the bank, lenders are at a disadvantage when it comes to payment difficulties when it comes to pressure from family or friends.

 

Popular financing options for companies

Popular financing options for companies

Popular financing options for businesses are

  • Working capital loan : This form is often used to finance current assets. This means that the time between purchasing and sales is bridged. A repayment is made from the sales revenue.
  • Growth loan: Whether it’s a new location, an expanded team, more products or more targeted marketing, the growth loan covers all expansion plans. Nowadays, digitization measures often also count in this area.
  • Investment credit: This loan is used to finance business investments such as machinery, vehicles or means of production. Financing of real estate also belongs to this area. At the same time, these investments count as security.
  • Productivity increase: With this loan, all conceivable restructuring of a company can be financed. This includes automation and digitization, among other things. In the age of Industry 4.0 in particular, this type of financing is becoming increasingly attractive for many companies. To optimize processes permanently, to remain competitive and to be able to meet customer needs in the long term, there is no way around digital productivity today.

 

A future outlook: financing solutions from artificial intelligence to digital full credit

money loan

More and more industries are currently shifting their focus. In the financial sector too, the character of digitization is constantly emerging despite the initial difficulties. May it be AI customer service interfaces or cooperation between banks and FinTechs, the industry is gradually changing. The following three digital trends already provided new financing options – especially for companies – in the past year:

Artificial Intelligence (AI)

Artificial intelligence is an increasingly important topic in many companies. In the future, AI systems will carry out credit checks and support customer advisors. The ongoing learning process in particular makes it possible to make more precise statements about the probability of failure.

Overall, AI primarily serves to accelerate the granting of a loan.

FinTechs

FinTechs is short for financial technology companies. They make the path to financing easier, faster and cheaper. Digital marketplaces for financing with banks and alternative donors open up new access routes. In the future, this should enable a digital loan without analog steps.

Crowd funding

Overall, financing without a bank is becoming increasingly popular. Various projects are presented on online platforms and supported by commercial and private investors with individual sums. There are various forms of crowdfunding:

  • Crowdfunding,
  • Crowdinvesting and
  • Crowd lending

Crowdlending is about lending to companies or individuals. These are mediated by internet platforms. In contrast to crowdinvesting, the lender does not receive company or profit shares, but interest and repayment installments on a monthly basis over a certain term.

Credit for self-employed people despite without credit rating

Even if the choice of financing options for the self-employed and freelancers seems quite large, taking out a loan turns out to be quite complicated in the end. Banks and savings banks attach great importance to collateral and sureties, which as an independent worker can sometimes not be provided at all.

It becomes even more difficult if a loan is sought for the self-employed despite without credit rating. Because even if credit rating does not match, the creditworthiness is usually so bad that there is no creditworthiness.

So it works anyway

So it works anyway

A loan for the self-employed despite without credit rating is not found in any traditional bank. They will never refrain from asking credit rating. Even a loan from abroad cannot help here, as it is only granted to employees and civil servants.

 

It’s possible to get approved for a personal loan when you’re self-employed, but lenders will likely put your finances under a microscope to make sure you earn enough income to keep up with payments.

One possibility is a personal loan.

One possibility is a personal loan.

This is granted by private donors who want to support and strengthen a company with their investment. In order to be able to benefit from such support, as a prospect you have to be able to show exactly what the money is so urgently needed for. Similar to traditional borrowing, a business plan should therefore be drawn up that not only shows the company’s previous strengths, but also gives an outlook into the future.

If you can convince and find a private investor, there should be nothing standing in the way of a loan for the self-employed despite without credit rating. However, even then you should not be tempted by the first offer. Despite the great euphoria about the loan, the conditions should be looked at very carefully. In particular, the interest and the repayment conditions should be such that you can live well with the loan. Because even a private lender wants to have his money back at some point.

And if you then cannot pay, the debt trap and a lot of trouble are inevitable. Things that you certainly want to avoid and that can be avoided without problems if you approach the borrowing with sense and understanding.

Credit without bank statements.

The current account statement is one of the documents that may be required when applying for a loan. In some cases, financial institutions also request statements from the last three months. Based on the account movements, you can check the information provided by the loan applicant regarding the costs necessary for his life. At the same time, potential credit contract partners receive information about the extent to which the overdraft facility is actually used. The private credit checker information only provides information about the existence of such a credit line.

Credit customers often find it uncomfortable to submit bank statements

Credit customers often find it uncomfortable to submit bank statements

Applicants often prefer a loan without having to submit bank statements because they give their contracting party insights into their private use of money, which are not absolutely necessary for lending. In fact, far from all financial institutions do not require bank statements to be presented for the loan application. Many banks are satisfied with submitting proof of wages and possibly a copy of the employment contract. When financial institutions grant a loan without bank statements, they usually set average values ​​for the household account, so that it can be advantageous for borrowers with unusually low household costs to prove their account movements.

Applies for a loan without bank statements

In the case of an overdraft, it is essential to pay attention to the lending without bank statements

In the case of an overdraft, it is essential to pay attention to the lending without bank statements. If the loan applicant has overdrawn his checking account, he must make sure that he only applies for a loan without bank statements. A bank overdraft existing at the time of borrowing is generally considered to be an indication of poor creditworthiness and, at the same time, proof of non-compliance with contractual agreements in financial matters. Banks understand an overdraft only as a negative balance not covered by the overdraft facility. This occurs because most financial institutions give current accounts a tolerance limit for overdrafts if this is caused by direct debits.

In addition, cardholders sometimes fail to notice that there are failures in checking their balance at the ATM or making payments, since the account-holding bank has set maximum amounts that can be withdrawn without checking, which is sufficient for most transactions. An instant loan without proof of wages is usually granted at the same time as a loan without bank statements, since the bank does not request any supporting documents for technical reasons.