Not every wish can simply be paid for out of existing reserves. Therefore, especially consumers whose financial leeway is limited, often resort to a loan. In this case, a personal loan promises some advantages over an overdraft facility, which we would like to present in more detail in this article.
Cheaper and safer than an overdraft loan
Many people who need funds as quickly as possible resort to an overdraft facility in this case. However, these are often not aware of the fact that the cost of such a loan is significantly higher than a personal loan. The lower interest rates in this case are only one of the advantages and the consumer receives the amount borrowed, following an online commitment only a short time later paid into their own account. Who therefore can not guarantee that a taken out overdraft facility will be repaid immediately, should better look into the possibility of a personal loan.
Advantages and disadvantages of a personal loan
A personal loan has not only advantages, which is mainly due to the monthly repayments. For this can, depending on income, sometimes burden a consumer more than initially suspected. This can become a problem especially if the planned redemption is prevented by unforeseen events. If the financial bottleneck becomes too great at some point, the best thing to do is to talk openly to your bank advisor. Because this can grant under circumstances a suspension of the installment payment, until the own financial situation relaxed again a little bit. On the other hand, if you have the option to repay the loan faster than initially assumed, you can also do so. However, in the event of early repayment, an early repayment penalty is usually charged, but this is often set too high. A personal loan can, however, be secured with the help of an insurance policy that takes effect in the event of unemployment or incapacity for work.
Attractive interest rate advantages
Who takes out a loan, should always pay special attention to the interest rates. The level of these depends, among other things, on the European key interest rate, which is set by the European Central Bank. Since the ECB has lowered the rate again and again in recent years, a personal loan is currently available comparatively cheaply. In addition, however, the amount of interest always depends on the term of the loan as well as the creditworthiness of the customer. Therefore, those who are in a better financial position also have a much better chance of getting a loan paid out, and by keeping the term as short as possible, the risk of the consumer getting into financial difficulties is reduced.
Credit check in advance
While various online platforms advertise loans without a SCHUFA check, this is rarely true. While creditworthiness plays a lesser role when applying for a personal loan, it can also have an impact on the final decision. Because all credit platforms make their decision about a payout based on various checks. However, this is primarily to give potential funders as full a picture of the applicant as possible, upon which they can make their decision. And this usually includes a note regarding the applicant's creditworthiness and an assessment of the possible risk of default.
The application
If one has made the decision to apply for a personal loan, the first step is to enter one's own data on the website of the loan service provider. In addition to the type of employment and salary, there are other questions that need to be answered. In this way, the applicant's creditworthiness is checked and he or she subsequently receives the offer to take out a personal loan through the respective service provider. Such a personal loan is particularly suitable for people who are unable to obtain a bank loan due to their credit rating or for other reasons. But for all other consumers, a personal loan is sometimes an alternative to a traditional loan from a banking institution.