Category: Credit

Credit possible without collateral

Even without collateral, it is possible to have a loan agreement approved by a bank or credit institution. Just a few years ago, it was almost impossible to obtain a loan without collateral. One more chance if they provide enough collateral, but in many cases this is not possible. It is also possible to negotiate complicated cases. Even under difficult circumstances, it is possible to bargain.

Requirements for the lending

Requirements for the lending

The application for a loan is made regularly at a house bank or a savings bank. More and more Internet services are being used, from which banks and financial advisers as well as specialized specialist portals with loans are being offered by private investors. The demand for collateral is also treated very differently. The decision on the loan application submitted to a house bank or a savings bank company is usually taken by the house bank after a comprehensive credit check.

On the one hand, it is a matter of examining the income situation on the basis of the pay slips of the past (usually three to six) months of life. For employees and retirees, a regular monthly net income of USD 1,200 to 1,500 after deduction of all ongoing costs such as credit installments or rental costs is usually required. In contrast, an application is addressed to the Credit Bureau or another credit agency.

Who proves the necessary current income and the credit information is good, usually requires no further collateral for installment loans. If the monthly standard income of borrowers (eg low-paid, students or unemployed) does not reach the minimum required or if the credit information contains negative features such as bank-terminated loans or overdrafts, the claim is either immediately denied or the security claim asserted.

Such collateral may be held by a guarantor or joint debtor who can itself meet the banks’ creditworthiness requirements by entering into the loan agreement and jointly and severally accepting the liabilities under this loan agreement. The guarantee or joint debtor must fulfill the creditworthiness of the credit institution. In addition, the mortgage lien charge with loads such. For example, liens or guaranties are a suitable means of security. It is becoming increasingly clear, however, that the commercial and private bank lending decisions are based solely on scoring or on another credit institution, without discussing the problem of the existence of collateral.

Positive credit rating

It often happens that with a positive credit rating installment loans – these are classic consumer loans – are approved without additional collateral. However, if the credit rating of the Good Finance is positive, the existence of collateral often does not lead to the conclusion of a credit agreement. As a result, collateral is usually only relevant to certain types of loans.

For example, it is essential to provide collateral for borrowing to buy land. In this case, the property, the purchase of which is refinanced by the lending business, will be charged with a mortgage or mortgage in favor of the lender to secure the loan. In a car loan, the car is transferred to the lender to secure the loan, which is reflected in the fact that the vehicle registration is deposited with the financing house bank.

In addition to these two forms of lending, the problem of collateral will normally only arise if the lending volume in the commercial sector is high. The transfer of ownership of entire factories and machines is still very important. For the privately-interested creditor, the question arises as to whether and under what conditions a loan can also be taken if neither the creditworthiness requirements of a banking or savings bank side nor the usual bank security can be provided.

In such cases, the prospective borrower has little chance of obtaining credit from a traditional bank or central bank. He encounters – mostly in the network – on offers from direct banks or special financiers who want to grant loans even in such situations. Often these are loans that are described as “free of creation” and are lent by foreign, mainly Swiss lenders.

It should be noted that even “non-crediting” loans and “loans from Switzerland” are often only granted after certain creditworthiness requirements have been met. Such loans are dependent on the particular risk assessment of the lender. The lender has the opportunity to verify the creditworthiness. Often, however, here only small amounts of credit – usually not more than 5000 USD – awarded.

Often the loan limit is much lower. In addition, credit institutions or lenders can usually offset the increased risk of default by lacking creditworthiness and collateral with loan interest rates slightly above the market rates for installment loans. Loans, despite insufficient collateral, are therefore only suitable for a group of persons who, due to a lack of creditworthiness, do not have access to the general credit market and therefore have to accept a risky higher interest rate.

In most cases, such a loan will cover a much needed short-term cash needs. Alternatively, the allocation of unsecured loans to private investors. Meanwhile, there are several mediation portals in the network, which bundle here offer and demand. The investor determines for himself which requirements he places on the creditworthiness of the applicant and whether he requires the provision of collateral.

It is sometimes possible to get a loan without collateral.

It is sometimes possible to get a loan without collateral.

But here, too, the loan amounts are usually very limited. Anyone who, for reasons of creditworthiness, can not obtain credit from conventional commercial or savings banks and can not access standard bank collateral must enter a largely unregulated market segment of the banking sector.

Accordingly, the offers for unsecured loans are very different. This starts with the amount of the existing credit. Although most loan offers have low caps, typically between $ 3,000 and $ 5,000, there are also lenders that offer a significantly higher credit value. Sometimes maximum amounts of USD 30000 or even USD 50,000 are to be calculated in the network.

These usually last up to 84 months. Due to the extraordinary range of interest rates required, a comprehensive comparison via the relevant Internet platforms is possible and necessary. In addition, the conclusion of a residual debt insurance is often required, which often makes the loan significantly more expensive. In addition, a condition comparison should consider the possibility of full or partial early repayment of the loan without the need for an early repayment by the lender.

Anyone in need of a loan without being able to provide collateral and otherwise failing to meet the creditworthiness requirements of banks or Best Bank is often confronted with the greedy capital market’s offer. which does not meet the creditworthiness of banks or Best Bank. In addition to well-known direct banks, there are market participants who doubt the integrity of their business practices. The same applies if, in addition to the application for a loan, a “consultancy contract” is to be signed for a fee.

Crowdlending or bank loan for your credit application?

Crowdlending has made its place in Switzerland for several years. These participative lending platforms are positioned as alternatives to traditional banking services by allowing individuals to lend money between individuals. And this, without going through the banks. In Switzerland, four platforms offer private loans on the crowdlending model. Comparison between banks and crowdlending for consumer credit.

Rate competition

loan rate

The crowdlending system, without intermediaries, and without bank taxes, makes it possible to offer very advantageous rates. The Good Lenders Credit platform raises its minimum bar to 3.9% and credit world even drops to 1.5%. A few years ago, these rates would have been absolutely new on the banking market. But today, with the rate cut decided in 2016, the gap between banks and platforms tends to narrow. Banks offer competitive rates of around 4.5%. The Cream Bank even goes up to 3.9%. With regard to maximum rates, the practices are different in the two loan systems. Banks that do consumer credit are required by law on consumer credit to charge rates not exceeding 10%.

For crowdfunding platforms, it’s different. As they are not subject to the law on consumer credit, they can charge higher rates. Share, for example, posts a ceiling rate of 15% on its site. These high rates are beneficial to investors and allow people who would be denied credit at the bank to borrow. Other platforms claim to apply the rates in effect under the CCA even if they are not obliged to do so. Lite Lending presents for example, a ceiling of 9.9% on its website and claims to comply with all the measures in force in the law on consumer credit.

What amounts?

loan amounts?

Traditional banks offer amounts of up to USD 250,000 while crowdlending platforms go, for some, much higher in the field of private credit. Lite Lending displays, for example, a ceiling amount of 5,000,000 USD even if it is unlikely that such amount would have been reached one day. Good Lenders Credit goes up to USD 350,000. The possibilities are therefore more numerous on crowdfunding platforms. For repayment terms, however, banks offer more latitude to borrowers with terms up to 120 months, against 84 at most on the side of crowdlending. The monthly payments are potentially lower on the side of the banks thanks to the longer repayment periods.

Speed ​​in the procedure

credit loans

If the borrower chooses crowdlending to apply for his loan, he can get the desired amount very quickly. After the creditworthiness study of the borrowers, the loan platforms put the request online for a given time. For example, Good Lenders Credit limits the time to two weeks. A considerable advantage for someone who wishes to obtain credit quickly. However, there is no guarantee on obtaining a loan. If there are not enough investors or the requested amount is not reached within this time limit, the credit project falls into the water. For a loan from banks, the response to a request is very fast. They are required to respond within 24 hours as soon as all the mandatory documents have been gathered. However, there are additional waiting times, particularly compared to the revocation period which is 14 days, which slow down the obtaining of the money. For crowdfunding sites that meet this deadline, the duration before receiving the loan becomes similar to that of banks.

What fight against over-indebtedness?

debt loans

The advantage goes to the banks on this side. Since crowdlending platforms are not subject to the CCA, they are exempt from several federal measures taken to limit over-indebtedness. The drop-in ceiling rates was applied to limit risky situations with excessively high monthly payments. The right of revocation enshrined in the law on consumer credit allows loan applicants to think seriously about the commitment that a loan implies. If a consumer makes a credit request on a crowdfunding platform, according to which platform, he can theoretically not retract while at a bank, he would have 14 days to change his mind.

The brokers of the participating loan platforms are also not required to apply responsible credit, which obliges banks to assess a risk margin in the event of the unexpected. The consumer could then end up with a credit at risk, in the absence of a solid credit study. Some platforms claim to apply the law on consumer credit even if they are not subject to it, but there is no legal guarantee for the consumer who cannot refer to it.

And lending platforms can enforce the law in a variety of ways. Good Lenders Credit for example, says it respects the LCC but informs on its site that it applies rates at 15%. People interested in crowdlending loan must imperatively keep in mind that they are not protected by the law on consumer credit for this type of credit. says it respects the LCC but informs on its site that it applies rates at 15%. People interested in crowdlending loan must imperatively keep in mind that they are not protected by the law on consumer credit for this type of credit. says it respects the LCC but informs on its site that it applies rates at 15%. People interested in crowdlending loan must imperatively keep in mind that they are not protected by the law on consumer credit for this type of credit.

Unemployment: How to make a credit when one is unemployed?

We wrote this article because we noticed that the following question often comes up on some sites:

  • How to get a credit when you are a job seeker?
  • Answer : To our knowledge there is no specific loan for the unemployed!

It is sadly obvious that people looking for work are less likely than assets to obtain a loan. The reason is simple, banks are companies whose purpose is lucrative and not social organizations. This is how the company works.

Humorous illustration about unemployment

Humorous illustration about unemployment

This does not mean that an unemployed person can not borrow, we will try to explore the possible ways to get credit :

– To begin, know that a bank will lend you money if you have a sponsor. That is, you will be more likely to get credit if you own. On the other hand she will study your financial situation. If you are late rights, it will be more complicated. On the other hand, if you are unemployed recently and you have a long period of compensation in front of you, you have your chances. Ideally, the last term of the credit should come before the end of compensation for employment pole.

If your bank rejects your request, nothing is lost, you will have to contact a social worker. It will be able to build a file and guide its request in two directions, depending on the reason for the loan. ( either to the CAF or to the social micro-credit ):

Reason for your loan is the purchase of a car

Reason for your loan is the purchase of a car 

If you receive assistance from the CAF (APL, or others…) and the reason for your loan is the purchase of a car for the purpose of going to an internship employment pole, or a job corresponds to your search but a vehicle is required to obtain the position. The social worker can then build a file that will submit your CAF. This is a loan called ” honor loan ” usually a modest amount. It is an interest-free, zero interest loan (you only repay the loan). Monthly deadlines are deducted each month from your family benefits. Be aware that the granting of this loan of honor is not automatic.

The social worker can also direct his request to personal micro-credit. (It is intended for people receiving RSA, jobseekers or people in precarious situations). The principle is as follows: The social worker builds a file, she then submits it to a bank. The bank studies it benevolently for a simple reason, is that if it makes a positive response, the loan is secured by a special fund, so the bank takes little risk. You will be more likely to have a positive answer if the loan is used to buy a vehicle and that it is essential for you to get a job. The amount allocated generally allows you to buy a used car. Or to restore your own car.

If you wish to create your own micro-enterprise and are looking for financing, we advise you to read our article entitled:

Make an appointment with a social worker

Make an appointment with a social worker

IN SUMMARY: If you need a loan, do not rush, proceed in the following order. Ask your banker first, if he refuses, make an appointment with a social worker, send him the evidence proving that the bank refused your request, as well as documents proving your current situation. Depending on your situation, she will know where to make the requests and then take the steps on your behalf. If you want to create your own business.

Important clarification : Unlike the loan of honor, the micro-credit is a conventional loan, that is to say that there is interest to repay and that the deadlines are taken from your bank account.