Online loans are installment loans to private individuals. They are usually granted by direct banks, but also by banks with a branch network, for a certain amount of money. As a rule, these are 1,000 to 75,000 USD with a term of up to 84 months.
Thanks to modern media, credit applications can be submitted online around the clock. The customer no longer has to go to the bank branch, but can act virtually. This causes less time and costs. However, the on-site consultation is omitted. The online loans can therefore be offered at more favorable interest rates. Further advantages are the short processing time and the quick payment of the desired amount of money, provided the customer meets the necessary requirements for the loan.
With many comparison computers on consumer portals, the customer has the opportunity to find the cheapest provider for him. At the same time, he receives an overview of the banks with their respective interest rates.
A loan calculator also gives an overview of the respective loan amount with the number and amount of the monthly constant installments. This includes the loan repayment and the interest. If he makes an application, he will also be shown the total cost of the interest during the term of the contract.
The loan application
If the customer has chosen a specific bank on the Internet, he will be guided through the program in several steps when making his application and can fill in the relevant information on the following points:
- credit request
- regular earnings
- Loans and commitments to other banks
- Request credit protection and
- Personal Information.
supply of credit
At the beginning of the application, the customer decides on the amount of his credit request and the term. He specifies whether he is self-employed or employed and since when and with which employer. He must also state whether the employment relationship is temporary or permanent and whether he is employed for more or less than 17 hours per week or less.
Regular income and expenses
Then the following information about monthly income and expenses must be answered:
- net income
- Other monthly income
- monthly rent or property charge
- Total monthly maintenance payments
- Number of dependent children
- Other regular obligations
- Number of vehicles (car or motorcycle)
- Loans and commitments to other banks with monthly installments and remaining terms in months
- Desired repayment of the loan in question or not
In order to improve the credit rating, the customer has the option of working with a second person such as B. to apply for the loan to the spouse or partner. This is referred to as the 2nd borrower. His income and his liabilities are then also to be stated in the application and are included in the calculation.
As security for the family, it is recommended that you take out voluntary credit life insurance that comes with different benefits in the event of death, unemployment or incapacity to work. This will increase the monthly rate. The customer specifies in the application whether he wants insurance or would like to waive it.
In addition to the name and personal data, the place of residence, the accessibility by phone – private or business -, the email address, the employer and the current account from which the regular credit installments are to be deducted. The customer is advised that the credit conditions and the credit-relevant positions from the price-performance list of the bank concerned apply. These are stored online so that he can read and print out these documents.
Furthermore, the customer has to indicate that he is acting in his own economic interest. His consent is also required for the bank to have the information available there about his person with the protection association for general credit protection (Schufa). Then it is calculated online whether a credit approval or rejection of the credit results in advance based on all the data provided.
Credit rejection or loan approval
If the calculation results in a rejection, the customer will be informed of this immediately online and free of charge. The further steps in the program that lead to the loan application are therefore omitted. In the event of a possible loan approval, the following required forms are available online to the customer and can be printed out:
- Loan contract in duplicate
- Credit terms for consumer loans
- revocation information
- European standard information
- Information on joining life insurance
- General conditions for the respective insurances with information sheet on data processing and
Product information for installment protection insurance
- Prepared letter to the bank: In this letter, the customer is asked to send in the following documents:
– Copies of current pay slips for the past three months
– Evidence of additional income e.g. B. by bank statement
– Complete copy of the valid identity card or alternatively a copy of the valid passport, together with a copy of the registration certificate
– Copy of the employment contract, unless the date of employment is noted on the pay slip
– the signed form for the loan agreement.
If all the requirements for granting a loan are met and checked by the bank, the customer will promptly receive a written confirmation with the following information about the financing:
- Loan amount (including the total cost of interest)
- Start of term
- Installment plan
This information and the annual percentage rate can also be seen in the loan agreement. This is followed by the payment of the requested loan amount to the specified current account
Withdrawal and early repayment
Within 14 days, the customer has the right to withdraw from the contract without giving reasons in writing by letter, fax or email. The period begins after the contract has been concluded, but only when the customer has received all the mandatory information on the type of loan, contract duration and net loan amount in a copy of the application or contract document intended for him, in accordance with Section 492 (2) BGB. If the loan has already been paid out, the customer can repay the amount within 30 days. He then has to pay the debit interest for the time between payment and repayment.
The customer also has the right to repay the loan in full or in part at any time. According to Section 502 of the German Civil Code (BGB), however, the bank can demand early repayment compensation for the loss due to lost interest. The calculation of the compensation is based on the mathematical framework determined by the Federal Court of Justice and can be communicated by the bank on request.