What is a personal loan
The personal loan - borrow money from the bank or from private individuals?
What is a personal loan?
A personal loan is an installment loan that is repaid in constant monthly installments. The interest rates for the personal loan are precisely determined over the entire term. You can apply for a personal loan at a local branch bank, on the Internet via an online loan comparison or as a loan from a private person, as a so-called peer-to-peer loan (P2P loan).
What can I use a personal loan for?
The classic personal loan, also called personal loan, installment loan or consumer loan, is granted exclusively to private consumers. The private borrower borrows money for purchases such as a new or used car, a move, new furniture, modernization or real estate financing. Businesspeople, freelancers or the self-employed can only take out a personal loan in the form of a peer-to-peer loan or use special forms of credit such as the loan for the self-employed.
Tip: If you would like to take out a loan, specifying the intended use can mean that the conditions for the personal loan are significantly more favorable than without specifying it. Based on the intended use, the lender can better calculate the risk of default in the event of insolvency and thus offer you more favorable terms. So do not be afraid to state the purpose of the loan when taking out a loan. In the case of a debt rescheduling or a pure consumer loan, the purpose is not necessary, as no security can be deposited with the lender. It is different with car financing, here the car serves as security and often leads to a cheaper private loan.
Who Provides Personal Loans?
If you want to borrow money through a personal loan, you have the following options:
- You can take out a personal loan from a local branch bank.
- You can find a cheap personal loan through an online loan comparison service.
- You can borrow money from a private individual.
Where can I get a personal loan cheapest?
You can get a cheap personal loan via an online loan comparison. The private loans offered, which you will find in comparison, are from both branch banks and direct banks. The loan conditions such as the APR, the monthly rate for the repayment of the personal loan and the loan costs can be easily compared with each other.
An alternative to a personal loan from the bank is a loan from a private person, e.g. from friends or relatives. With the so-called peer-to-peer loan - when the money is borrowed from friends and relatives - the interest rates can possibly be lower than with a loan from the bank. Still, P2P credit is a loan that needs to be repaid. In addition to credit comparisons, where you can request classic personal loans from the bank, there are online platforms that only offer loans from private individuals. These include, for example, the online platforms auxmoney and Lendico. However, the interest rates can be higher here than with a classic loan comparison, as the lenders often charge higher loan rates than a bank.
Tip: Often, branch bank personal loans are more expensive compared to direct banks because branch banks have to spend more on staff and administration costs. When it comes to loan financing, it is fundamentally important to obtain different offers and compare them with one another
Personal loan in comparison - bank vs. credit from private
A loan comparison shows how high the interest rates on a personal loan are, what loan costs arise when taking out the loan and what monthly loan installment can be expected. Depending on whether it is a classic personal loan from the bank or a peer-to-peer loan, the following features are characteristic:
What are the characteristics of a personal loan from the bank?
- Borrowing takes place via an online comparison portal or directly via a bank.
- The lender is always a bank.
- The credit terms (interest, term, repayment installment) are specified by the lender.
- The interest rate depends on the borrower's creditworthiness.
- There is always a SCHUFA query.
What are the interest rates on a personal loan from the bank?
The amount of the loan interest depends, among other things, on the loan amount, the term, but also on the intended use. The better your credit rating, the cheaper the loan from the bank.
What are the characteristics of a loan from private?
- Borrowing takes place via a credit platform that you have to register with beforehand.
- The lender and borrower are private individuals.
- The loan terms (interest, term, repayment installment) are freely negotiable between the lender and the borrower.
- The amount of interest depends on the creditworthiness of the borrower and the desired return on the lender.
- A loan is also possible if the SCHUFA is negative.
- With higher loan amounts, the amount can be collected from multiple lenders.
What are the risks with a personal loan?
Basically, a personal loan from the bank involves few risks. Because before granting the personal loan, the lender calculates the default risk based on your income and your creditworthiness, i.e. how good are the chances that you will be able to repay the loan. The better your credit rating, the lower the interest rates and the more promising a loan approval will be. Therefore answer all questions of the lender honestly in the self-assessment, do not conceal any current loans, bills or other financial obligations. The risk of a loan being rejected or problems with repayment are therefore low.
Risk with credit from the bank
The biggest risk with a personal loan is late payment. The money for the monthly installments is tight, the repayment of the personal loan is at risk and in the worst case scenario you have to take out a new loan to pay off the current one. You take this risk if
- You overestimated your financial situation and have lost track of ongoing bills, loans or return debits.
- Unexpected expenses arise such as the cost of car repairs, the repair of the heating system or dentures.
- the income is lost due to sudden unemployment.
Tip: When you take out the private loan, ask whether there is an option to take a break in installments or whether the repayment of the loan can be adjusted to the current situation at any time. If you take out the loan with a second person, the risk is reduced and you also benefit from a lower loan interest.
Risk with peer-to-peer credit
If a classic personal loan from the bank is rejected, there are only a few alternatives to borrowing money. For many borrowers, peer-to-peer credit is the only option. This is the risk you take with P2P lending:
- Remember that nobody gives away money. The interest rates for P2P loans via online platforms are often higher than for traditional bank loans. The reason: The lenders on peer-to-peer platforms invest in a financial investment where you want to achieve the best possible return with the highest possible interest.
- The loan amount for a P2P loan is lower than for a classic personal loan from the bank.
- Since these are private investors, more loan collateral may be required than from a bank.
Tip: If a private loan is the only way to borrow money, you shouldn't take any risks. Serious agents offer free registration, show all costs and fees and have an imprint on their website. You should stay away from offers with extremely high interest rates or promises such as “credit without credit check”.
What can I use a personal loan for?
You can use a loan from the bank or a loan from a private person for any purpose. According to the GfK consumer credit index, a loan is often taken out for car financing, the purchase of new furniture, entertainment electronics or large household appliances. The rescheduling of expensive loans or the settlement of the dispo are further reasons for a loan.
Is a personal loan possible with negative Schufa?
With the so-called peer-to-peer loans, i.e. loans from private, a loan is possible despite negative SCHUFA. When P2P loans are granted, the creditworthiness check is not only based on the SCHUFA score. Various creditworthiness characteristics, which can differ from credit intermediary to credit intermediary, play a role in this. In addition to the SCHUFA, this can be the AIS score or the CEG traffic light, according to the comparison portal auxmoney. An immediate loan disbursement without a prior credit check is not possible with reputable peer-to-peer brokers.
Is a personal loan always a loan from private?
The term "personal loan" is used in many ways. On the one hand, it can mean a loan from a bank, i.e. a classic installment loan or a loan from a private person.
With a classic loan, the bank alone grants the loan; with a private loan, it can be relatives, friends or other people. In addition to the lender, both types of loan differ from one another in terms of the level of interest, creditworthiness checks and consumer protection.
A loan from the bank is therefore not to be equated with a loan from private. Banks often speak of a personal loan if it is not tied to a specific purpose and the loan amount can be used freely.
Are private loans reputable?
Private loans are nothing new. With online platforms such as auxmoney or Lendico, loans are not only possible from the bank, but also from private individuals. The same principle applies here: check, compare and do not fall for bait offers. A loan from private is reputable, though
- You can rely on special platforms whose core competence is the granting of personal loans.
- An imprint according to § 5 of the Telemedia Act (TMG) can be found on the website of the credit broker.
- no excessively high or low interest rates are offered.
- all costs and fees are reported.
- not with promises like "credit without credit check" is advertised.
- no additional contracts have to be concluded.
- You can confirm your identity using the Postident procedure.
- Why do private individuals lend money to other private individuals?
Individuals lend money through P2P lending because they make a profit. The lenders on peer-to-peer platforms offer the personal loan at a certain interest rate. This is higher compared to overnight interest or fixed deposit interest and thus promises a better return.
Anyone who has to bridge a financial bottleneck and cannot get a loan from a German bank due to negative SCHUFA can take a Swiss loan as an alternative to peer-to-peer credit. In this case, no credit check is carried out by SCHUFA.
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