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
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.
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.