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Increasing credit opportunities: a catalog of measures

 

The best credit opportunities are those that don’t actually need a loan. This statement, apparently meant as a joke, is not that far-fetched. A loan at really good interest rates is reserved for a select group of people only.

Normal consumers cannot count on the extremely favorable effective annual interest rates that direct banks state as input interest rates. Under 2%? Only a negligible percentage of borrowers receive such interest conditions: employees or civil servants with the best credit ratings. For everyone else, interest rates are often 100% higher. And if you have an below-average credit rating, you have to pay significantly more. Or he may not get a loan at all. For all loan seekers with normal credit ratings or below, here are a few tips on how they can increase their credit opportunities.

Choose realistic loan amounts

Choose realistic loan amounts

Compare your expenses and your regular income with a household bill. The difference can be used for interest and repayment if it is subject to the attachment.

With a net family income of 1,800 dollars and a dependent child, around 120 dollars per month are subject to the attachment. No bank will pay out a normal installment loan of over 100,000 dollars. The attachable amount by no means covers the monthly repayment plus interest.

With a loan amount of 20,000 dollars and an effective annual interest rate of 4%, the term at a rate of 120 dollars is still 20 years. No bank will be prepared to grant this loan without further collateral. So choose a loan amount that you can repay within a reasonable period of time, taking into account your monthly income.

In our example, this would be 10,000 to 15,000 dollars.

Fast repayment with a short term

Fast repayment with a short term

Short terms with quick repayments mean lower credit costs. That is your advantage as a borrower.

For banks, the credit default risk increases as the term increases. A high credit default risk means higher interest rates. Or the borrower doesn’t get a loan at all. A reasonable loan term is therefore in the interest of both the lender and the borrower. Maturities should be based on the useful life of the investment to be financed with the loan.

Fill out the credit request carefully

Fill out the credit request carefully

Provide all income. In addition to the usual sources of income from self-employed and dependent work, income includes, for example, rental income, maintenance payments or social benefits that a family member receives. Don’t forget about expenses or pre-obligations. Provide a realistic picture of your income and assets. Provide all information with meaningful documents. Don’t make the loan request out of time.

Example: As a rule, banks require the bank statements of the past few months. If this results in return debits, simply wait a few months for your loan request. Avoid spelling mistakes or calculation errors. Sometimes even small errors can lead to the loan being rejected.

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