How to increase your credit standing

If you want to get a cash, consolidation or mortgage loan, you must prove your creditworthiness, which is a financial situation that allows you to repay the liability. It depends on the results of the analysis of your ability that it will depend on whether you get the funding you want.

If you are afraid of a negative rating

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Check how to increase your credit standing, and thus your chances of borrowing cash at the bank.

Checking your creditworthiness before the loan can be avoided. The bank must carry it out to make a financing decision.

To increase your chances of a positive consideration of your application, check your financial capabilities and improve your credit standing if necessary. It is not difficult – all you need to do is use the methods presented below.

What is creditworthiness?

What is creditworthiness?

Before we get into the question of how to increase your chances of a successful loan application, let’s explain what creditworthiness is. This is the borrower’s financial standing at the time of applying for a loan.

The bank conducts its analysis in order to check if the person will be able to repay the loan at all costs. In short, it is about confirming that the borrower will be able to pay the monthly installments. The methods of such assessment may vary depending on the bank, as well as whether you are applying for a small loan or a mortgage.

Individual institutions usually take into account many factors, but creditworthiness is mainly determined by the amount of earnings, as well as the difference between income and liabilities – the larger it is, the better the financial situation.

How to increase your credit standing – ways to improve your credit

How to increase your credit standing - ways to improve your credit

Before applying for a loan, especially the one to buy real estate, it is worth checking whether there is a chance for it to be considered by the bank. You can do it with a free tool available on the Internet, which is the creditworthiness calculator.

After entering the basic parameters of the loan you are interested in, as well as information about your income and liabilities, you will receive information on what loan you can afford. If the result is unsatisfactory, it will be necessary to increase creditworthiness.

And how to do it in practice? How to improve your credit standing? Learn simple methods that will help you in this.

Analyze your finances

This is the first step to improving creditworthiness. Calculate your income accurately (consider only those that you can document) as well as your commitments. In the case of the latter, write down all permanent charges arising from credit cards, loans, installment purchases as well as bills and other costs.

An analysis of this data will show you what has the biggest impact on your poor credit standing – maybe it will be too low income or maybe too high spending.

Increase your income

The amount of income has the greatest impact on creditworthiness. If you want to get a loan, it may be a good time to ask your boss for a raise or even change to a better-paid job.

However, remember that the bank takes into account the earnings from at least the last 3 months, so after increasing them you will need to refrain from applying for a loan.

Ensure a stable source of income

When assessing creditworthiness, banks look not only at the amount of income but also at their source. It should be permanent, therefore employment based on an indefinite employment contract is rated best.

So if you are on a probationary period or have a fixed-term contract, wait until it changes to a permanent one and applies for a loan after a minimum of 3 months.

Check your credit history in Credit Checker

All our credit obligations and whether we settle them on time are recorded in the Credit Information Bureau database.

The bank uses this register, so before applying for a loan it is worth checking the Credit Checker – thanks to that you will find out how high your debt is and whether there are any arrears in the register that may affect the negative assessment of your creditworthiness. Maybe some payments have not been recorded and you may not be aware that you are in arrears with payments.

Repay credit obligations, if possible

If you’re wondering how to increase your credit standing, try to pay off your existing credit obligations, especially those with arrears in Credit Checker. Before applying to the bank for the loan, pay off payday loans, reduce the debt on the invoice (debit), get rid of the credit card, close the installment loan taken in the store, etc.

Consolidate loans to reduce your monthly charges

If you pay off several loan products, try to combine all previously paid installments into one smaller one. To do this, you need to go to the bank for a consolidation loan. Thanks to it, you will reduce your monthly charges, which will automatically increase your credit standing. However, remember that consolidation is associated with additional costs and an extension of the repayment period.

What are the rights and obligations of the borrower?

About 60 percent of Poles, according to data from the Polish Bank Association, use various credit products. The most popular is cash loans.

Many of us have already dealt with bank lending in our lives, but awareness of the rights and obligations of borrowers is still low in our country. Let’s check how this issue is regulated in the regulations.

Borrower’s rights and obligations

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What can and what must the borrower do when taking out various bank loans? What obligations does he have towards the lender during the borrowing and before applying for it and after receiving it?

Many borrowers in Poland have no answers to these questions. It is worth familiarizing yourself thoroughly with your rights and obligations so that when dealing with banks or loan companies nothing surprises us.

Which law derives the rights and obligations of borrowers?

All rights and obligations of the borrower are regulated by the Act of May 11, 2011, on consumer credit. The provisions of this Act refer to consumer credit agreements, i.e. credit agreements in the amount not exceeding USD 255 550 or the equivalent of this amount in a currency other than the Polish currency, which the creditor grants or promises to grant to the consumer in the scope of its activities.

Some provisions of the Civil Code also regulate issues related to the granting of credit obligations.

What rights do the borrower have?

What rights do the borrower have?

As a consumer taking out a bank loan, the borrower has a number of rights. The rights of the borrower are included in the Act on consumer credit to a large extent as obligations of the lender and credit intermediary towards the customer. Let’s check what rights are at stake.

The right to receive reliable product information

The consumer has the right to obtain reliable information about the product or service from the bidder – the bank or the loan company. Even before the conclusion of the loan or credit agreement, the customer may request a free draft agreement if, in the creditor’s view, he meets the conditions for such obligations.

As part of providing information about the product or service, the consumer should learn about such matters as:

  • type of loan or credit,
  • contract duration – loan period,
  • installment repayment dates,
  • commitment interest rate,
  • actual annual interest rate (APRC),
  • rules for loan or loan repayment,
  • possible need to conclude additional insurance contracts and to pay notary costs in connection with the contract.

The right to withdraw from a loan or credit agreement

As a consumer, the borrower has the right to withdraw from the consumer loan agreement without giving a reason within 14 days of its conclusion. In addition, the lender is required to provide the customer with the credit agreement concluded a model statement of withdrawal from it.

If this design is not provided to the customer, he will be able to withdraw from the consumer loan agreement within 14 days from the date of delivery of such design by the bank. The model declaration of withdrawal from the contract may be handed by the lender to the consumer on a durable medium, with the name of the credit intermediary or the lender or the name together with the address of residence or registered office.

The consumer will not bear the costs associated with withdrawing from the consumer loan agreement. The only exception is the need to cover the interest for the period from the date of payment of the loan to the day of its repayment. He must return the loan amount to the creditor, together with interest immediately, but no later than within 30 days from the date of submission of the statement of withdrawal from the contract.

The loan repayment date is the day the consumer transfers the funds to the lender. If the borrower withdraws from the loan agreement correctly and in a timely manner, the creditor will not be entitled to any funds except for non-returnable costs incurred by him for public administration bodies and notary fees.

Right to repay the loan ahead of schedule

Another right of the borrower related to taking out loans and credits is the right to repay all or part of the loan before the date specified in the contract. In addition, according to the Consumer Credit Act, the creditor has no right to make early repayment conditional on whether he will be informed by the consumer about such an intention.

If the entire loan is repaid before the deadline specified in the contract, the total cost of the liability is reduced by the costs for the period by which the duration of the contract was shortened, even if the consumer incurred them before that repayment.

Right to credit information

Every consumer credit advertisement, regardless of where it is posted, should include information on credit costs. The lender is obliged to do so and the borrower has the right to be unambiguous, understandable and visibly informed by him about the interest rate along with the separation of fees taking into account the total cost of the loan, the total amount of the loan and the actual annual interest rate.

In addition, the creditor must explain to the consumer all matters regarding the undertaking. This information must be provided prior to the conclusion of the contract. The bank should also explain the provisions contained in the loan agreement, which will allow the consumer to make an informed decision regarding the conclusion of the agreement.

Who should the borrower contact to consult his rights and obligations?

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Unfortunately, not all borrowers are aware of their obligations and rights arising from the conclusion of a loan agreement. In case of difficulties in dealing with the lender, the borrower may seek the assistance of a consumer organization. She may represent him in court, for example.

Advice related to the rights and obligations of borrowers is provided by consumer ombudsmen – private and municipal. You can get free legal advice from them or ask for consultations about your case. The addresses of private and municipal consumer ombudsmen can be found on the website of the Office of Competition and Consumer Protection.

The Federation of Consumers and the Association of Polish Consumers may also be helpful, where free legal assistance is also offered, including for consumers.

Is saving important when buying a loan?

Despite an often uncertain socio-economic context (reform, elections, economic crisis, etc.), the French continue to save. However, is savings an asset in the context of a loan consolidation? Here are some answers.

By definition, the repurchase of credit is a banking operation making it possible to repay in advance the capital remaining due of its credit (real estate and / or consumption) in order to replace it by a new loan with reduced monthly payment and adapted to its finances and its projects.

Enabling the borrower’s finances to be reorganized efficiently and sustainably, the repurchase of credit, which concerns all borrower profiles and all socio-professional categories, and savings can have several common objectives, namely: anticipating the unexpected, achieving one or more projects without increasing its debt ratio or improving its borrowing capacity. In addition, unlike a mortgage application, savings cannot be used when buying back credit.

 

Is savings an asset when buying back credit?

Is savings an asset when buying back credit?

A borrower with one or more savings is considered someone serious in the eyes of the banks during a credit consolidation. He will always be in a better position to negotiate the best financing offers in force.

However, if having the agent aside can be a pledge of confidence during a credit buy-back, you should know that having one or more savings is not always synonymous with obtaining a credit buy-back. .

Namely, the financing of a grouping of credits is subject to several criteria, namely: a stable professional situation, a reasonable debt ratio (less than 33% of net income), absence of filing (FICP, FCC). The applicant for a credit buyout must also have a healthy banking behavior during the months preceding his request.

 

Saving credit for savers: deleveraging or saving?

Saving credit for savers: deleveraging or saving?

Borrowers with one or more savings must ask themselves several questions before making a credit union. The first reflex is to compare the interest rate proposed for the repurchase of credit and the remuneration of savings.

However, if the level of the interest rate is significantly lower than the interest rate on savings, it is recommended to invest your money and make a loan repurchase. On the other hand, this banking operation is not financially attractive if the rate proposed for the operation is very high. To know that the repurchase of credit can have, all the same, other motivations that the obtaining of better conditions of financing compared to its initial conditions of credits.

In addition, to assess the need to buy back credit when you have one or more savings, it is recommended to seek the services of a bank intermediary specializing in the subject. The free, no-commitment simulation of credit consolidation offered by this professional makes it possible to assess the interest of such an operation or even to preview the state of its finances after a consolidation of loans (real estate, consumption)

Finance furniture purchase cheaply and conveniently with a loan.

 

According to a recent survey by Spin Lender financial market research, many Germans plan to buy new furniture, electrical appliances or larger household appliances this year – in principle this is not a surprising study result. In comparison to the previous year, however, the Germans tend to finance this purchase much more by means of a bank loan.

Who currently lacks the necessary money to buy furniture or larger household appliances opens up three options for action: The consumer can either start saving the amount of money required, pay via the overdraft facility of the checking account or bridge the financial bottleneck with the installment loan from a bank.

Avoid financing the purchase of furniture with overdrafts

Avoid financing the purchase of furniture with overdrafts

Since interest rates for savings, such as overnight or fixed-term deposit accounts, are currently at an all-time low and often do not even compensate for inflation, it would take a long time to save the amount of money needed – reacting to current special offers from furniture retailers is also an option not possible.

Consumers should continue to avoid urgently financing the purchase with the expensive overdraft facility – especially if the overdraft amount cannot be offset in the very near future. Banks charge very high interest rates for overdrafting the current account – as a rule, the fee is a multiple of normal loan interest. Since no repayment plan is agreed with the bank when using the overdraft facility, there is a very high likelihood that the consumer will use the overdraft facility longer than is actually necessary – this also increases the interest payments due.

Pay for furniture purchase cheaply with a small loan

Pay for furniture purchase cheaply with a small loan

To finance a furniture purchase through a bank loan, it is usually worthwhile for consumers to take out a so-called small loan. Essentially, these loans differ only in a lower loan amount of a maximum of 5,000 USD and the resulting shorter term.

Such a small loan of USD 1,000 with a term of 12 months can currently be taken out by consumers via an independent comparison portal on the Internet from an effective annual interest rate of 2.74 percent: Each month, the furniture buyer then only pays the bank just under USD 85 back, altogether interest costs of only 15 USD are due for this loan. For a long time now, you can no longer take out a cheaper loan to buy furniture from a bank – so what are you waiting for? Treat your apartment to a new coat of paint this spring with new furnishings for your own four walls.

Credit conversion – is it worth and how to convert?

Mortgage conversion is a way to more favorable loan repayment terms. However, it is not always profitable. Procedures may be subject to high commissions and additional fees. Is it worth making a conversion then? How and when is the best time to decide on it? We answer!

Foreign currency loans

Foreign currency loans

Foreign currency loan is a loan that is granted in a currency other than the currency in force in a given country. It is also called a foreign currency loan. In Poland, this loan is most often offered in euros or in Swiss francs.

Until recently, a loan in a foreign currency could have been taken out by anyone who showed adequate creditworthiness. Today, however, it can be used by people who earn income in the currency in which they want to make a commitment.

What is currency risk?

Currency risk is the possibility of incurring losses as a result of changes in exchange rates. Fluctuations in these rates can lead to better but also worsening of your financial situation.

However, you can never accurately predict the direction and scale of changes in exchange rates. Therefore, when investing or incurring liabilities in a currency other than the one in which you earn, you are always burdened with such a risk.

Mortgage conversion in 2020 – what is it about?

Mortgage conversion in 2020 - what is it about?

Currency conversion of a loan is one of the ways to restructure, i.e. to change the method of settling the financial liability. With it, you can set new, more favorable loan repayment terms.

It involves changing the currency in which the loan is repaid. This solution is dedicated mainly to people who made a commitment to the strengthening currency. Along with the strengthening of the currency, interest rates increase, and hence the interest rate on the loan.

The more the currency is strengthened, the higher the loan costs are. So if you have a foreign currency mortgage, you will have to bear the costs associated with global economic changes that are complete without your influence.

What regulations govern the procedure for converting a loan?

There are currently no separate provisions regarding the conversion of the loan. The provisions of the Banking Act and general legal provisions apply. Due to the problem of people who took out loans in francs, work is still underway on changes in the currency conversion law.

When is it worth converting the mortgage?

When is it worth converting the mortgage?

Currency conversion results in the fact that after its introduction, further installment repayments will take place in dollars. This means that the installment amount is certain and the currency risk is leveled out. However, this solution does not always pay off. It is favorable when the loan currency rate stays low and the dollar is strong.

In addition, analysts predict that the currency in which you took out the loan will strengthen. Currency conversion can also be beneficial if the currency in which you earn has changed.

What are the benefits of loan conversion?

The greatest benefit of currency conversion is the certainty about the amount of loan installments. However, this solution also has many disadvantages that you should keep in mind before making hasty decisions.

What are the pros and cons of converting your mortgage?

Before you start thinking about changing the currency in which you repay the loan, check what currency conversion involves. The pros and cons of such a decision are not always balanced.

Disadvantages

  • the need to pay a commission for currency conversion
  • the threat of higher loan margin
  • risk of less favorable interest rate
  • the need to pay additional currency exchange costs

Benefits

  • paying off the rest of the loan in USD
  • a chance to lower the loan margin
  • a chance to take advantage of more favorable interest rates
  • the certainty of a fixed installment payment

Rules for converting the mortgage

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The procedure for converting your mortgage is subject to certain rules. The legal regulations that banks are subject to impose restrictions on those who want to convert a loan. What rules apply in this regard?

Who can convert the loan?

According to the “S” recommendation issued by the Polish Financial Supervision Authority, loans in foreign currency may be granted only to persons who document that they collect income in it.

This means that people who earn only in USD cannot apply for a foreign currency loan. They also cannot apply for the conversion of a loan already granted in USD.

Important!

To apply for a loan conversion, you must prove that you earn in a particular currency. The bank usually requires appropriate certificates translated into Polish.

How long does it take to convert the loan?

It is difficult to say unequivocally how long it will take to convert the loan. The application is not complicated, but in many cases, the bank is testing the applicant’s creditworthiness again.

The waiting time for a decision may, therefore, resemble applying for a grant.

How much does it cost to convert a mortgage?

Banks charge considerable fees for the currency conversion of a loan. They usually add a commission for currency conversion in the amount of 0.5 to 1.5 percent of the debt balance. It is added monthly to the loan repayment installment.

In addition, they also charge a fee for drawing up an annex to the contract, specifying the terms of currency conversion. Normally it is from 100 to 350 USD. An additional cost is also the so-called currency spread, which is the difference between the rate of payment and repayment of the loan. How much the currency conversion of the loan costs depends ultimately on the individual offer of the bank.

Debt transfer – can it be done without the debtor’s consent?

A company other than the one with which the customer has concluded a contract may apply for payment for the services or goods purchased. In this situation, he should not panic, but calmly read the letter from which this information arises.

Everything indicates that the company (e.g. selling in installments, telecommunications, media provider) has transferred its claim to another entity. She did not have to consult this with the client, because the regulations allow the transfer of claims without obtaining the consent of the debtor.

A transfer of debt to another entity is not unlawful

A transfer of debt to another entity is not unlawful

It is called transfer of receivables ( cession is popularly referred to) and is regulated by the Civil Code. Companies are eager to use this solution – especially when the debt is difficult to collect because the customer does not want to pay or pays, but with a delay.

The company does not have to inform the debtor about the intention to transfer the liability to any third party. The rule is that it can always do so if the contract does not explicitly stipulate the ban on transfer (there are two other exceptions, but in practice, they are much less important).

If the person concluding the contract does not want his obligations to be sold, he should ensure that the contract contains a provision prohibiting the change of the creditor. This, however, may not be feasible: most consumer contracts are concluded on ready-made forms prepared by the company and it simply states that the claim may be disposed of or there is no word about it, which automatically means that the transfer is acceptable.

Of course, the terms of the contract can be negotiated and changes can be made to the printout, but in practice this is unlikely. The client would have to have a very strong negotiating position to bring about changes.

How do you know about the transfer?

Let’s discuss it with the example of a person who bought electronic equipment in installments and stopped repaying them at some point. The company operating the installment system may claim payment on its own, but may also transfer the claim to another entity; most likely choose a company specializing in debt collection.

As has been said, he does not have to warn the debtor of his intention, but at the same time, until he notifies him of the transfer, the debtor has the right to pay to the account of the current creditor (seller), who will have to settle with the new creditor (buyer). This is a beneficial solution for the debtor because the debtor should not have the task of knowing if his debt has not been transferred to any other company.

Let’s return to the example of an electronic equipment buyer whose debt has been transferred to another company. Who should the customer submit their purchase claims to (e.g. equipment has stopped working and the buyer wants to exercise his rights under the warranty or statutory rights, i.e. non-compliance of the goods with the contract) – to the seller or buyer of the claim?

In accordance with art. 513 § 1 of the Civil Code, the debtor is entitled to the purchaser of any claims that he had against the original creditor. Therefore, it will be him who will direct the request to repair the equipment or replace it with another one. This is an important regulation, because no matter whose benefit the debtor should pay (and for what reason the assignment occurred), he cannot be harmed as a result of decisions taken independently of him.

When it is not known who the creditor is

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Finally, one more possible situation. Imagine a debtor who did not pay his debts for a long time, e.g. he did not pay the subscription or shopping installments. When he finally decided to settle the debt, he called the creditor and asked to calculate the debt.

He obtained information that his claim was transferred, but the consultant is unable (he does not want to say, he does not know – it does not matter) to tell him who the creditor is now and what is the sum of the debt. Our debtor was advised to wait for a new creditor to contact him.

This is a very bad solution to the problem. We remind you that until the current creditor informs the debtor about the transfer of the claim, he has the right to perform the benefit on behalf of the company with which the debt arose. If he postpones the payment, the final debt will increase, because everyday interest is added.

The debtor in the example above should, therefore, pay for the invoice to which he has previously made payments. If he does not know how much he owes, he should pay as much as he estimates the debt, he will pay the rest when he is contacted by a new creditor.

Credit insurance: why take one?

A loan often represents a large sum to be repaid. The mortgage, in particular, spans several years, and in this period an accident can happen. In the event of loss of income, disability or death of the borrower, how to repay the credit? This is where insurance comes in, which aims to protect the policyholder and his family, as well as the lending institution. It is strongly advised to subscribe to it when borrowing a large sum.

 

The usefulness of credit-linked insurance

The usefulness of credit-linked insurance

Insurance is not a legal obligation, that is, the law does not oblige citizens to take out insurance with credit. However, banks and lending institutions may require it in the case of a mortgage. This type of loan, generally intended to finance a real estate project (acquisition or renovation of housing), often represents a substantial amount and is spread over ten years or more.

This is the reason why it is important to take out insurance, which will be used to pay off the credit in case you find yourself unable to do so. Of course, the bank can seize the mortgage to repay part of the credit, but this will seriously damage the borrower and his relatives. Thanks to insurance, it is possible to keep the property.

Concretely, insurance in addition to credit protects:

  • The insured: reimbursement continues despite loss of income;
  • Relatives of the insured (heirs, cohabiting spouse): they do not inherit the borrower’s debts;
  • The lender, who is repaid despite the inability of the borrower to discharge his debts.

Note that insurance in the context of a mortgage loan can give rise to tax deductions, subject to certain conditions:

  • Insurance is taken out before age 60 for women and age 65 for men;
  • The insured borrowers and recipients are restricted to relatives up to 2nd degree or spouse who lived with the insured;
  • The duration of the credit must be equal to or greater than 10 years;
  • The insured amount is equal to or greater than the capital borrowed.

 

Types of insurance for a mortgage

Types of insurance for a mortgage

There are two main insurances, which cover reimbursement according to the risks encountered.

Balance outstanding insurance

It ensures the repayment of the unpaid remains of the loan in the event of the death of the borrower. In this way, his heirs will not inherit his debts, and the lending institution is sure to receive his due. This insurance can be purchased from the bank that provided the loan or an insurer recommended by the establishment, this gives you the opportunity to negotiate a better loan rate. It is also possible to take out outstanding balance insurance with a third-party company, through competition.

Loss of income insurance

It reimburses the loan during a period of loss of income (eg involuntary job loss, illness or disability). The insurer will pay your monthly payments until you are able to do so again, according to the terms of the contract. You can subscribe to this type of insurance with a third company, or with the public authorities.

In the Walloon region, you can benefit from a credit repayment for a maximum of 3 years, up to $ 6,200 per year under conditions. The insurance must be taken out within 6 months of obtaining the credit, and covers job losses that occur in the first 8 years of the credit.

 

Taking out credit insurance

Taking out credit insurance

To take out insurance in addition to a loan, the following conditions must be met:

  • The duration of the insurance and that of the linked loan are the same (for a 12-year mortgage, short-term insurance for 12 years);
  • Establish a minimum amount to be insured;
  • Perform a health exam to determine the risks.

It is possible to pay a single premium for insurance, or to opt for an annual premium. The amount of the premium is calculated according to the age and state of health of the borrower, as well as the amount, duration and interest rate of the loan.

Apply the lightning credit instant payout now.

 

Who does not know that ? Because you think that you have all finances under control and an unexpected invoice or repair comes. The money that you may have put aside is often not enough. For example, some have to take out a loan so that the financial situation can relax.

How do you get an instant credit with instant disbursement?

How do you get an instant credit with instant disbursement?

For some customers, the conversation at the bank is already an obstacle that can hardly be overcome. The customer is put through its paces, so to speak. This means nothing other than that the bank will check whether the customer is able to provide a monthly installment. The salary for a lightning credit with immediate disbursement is crucial, because the credit line is based on this. If the income is high enough, no collateral is often required and the credit line can be set high.

However, the situation is very different for low-income earners or customers with poor credit ratings. Here banks often require collateral and the loan will be in the form of a small loan. The bank works with collateral so that the loan can be paid without any problems. If you do not have this security, you will try in vain to get a loan.

Customers who have no income at all and are now dependent on the help of the state do not even have to start trying to apply. These people do not get credit. This is because banks are not allowed to seize the customer’s social benefits in the event of a loan default. That would mean that the borrowed money could not be claimed back.

Find and use alternatives

Find and use alternatives

Anyone who cannot get a lightning credit with immediate payment from a savings bank or bank due to a lack of collateral or poor creditworthiness must look for alternatives. These are not always easy to find, but they do exist. A look at the Internet is often enough to find a provider that grants a lightning credit with an immediate payment.

The customer must also have an income here. If this is not sufficient, there will be a small loan amount. Private lenders in particular, who cannot check the Credit Bureau, grant a loan in such cases. The customer will quickly realize that borrowing is not cheap. This is due to the risk that the lender takes, because he has no options to check the creditworthiness using the Credit Bureau. So the interest on both loans is higher than at a bank.

If you don’t get an installment loan from your bank, you can try to get a overdraft facility. This is set up immediately so that the overdraft facility is immediately available to the customer. However, this loan should always be taken when there are really difficulties. The overdraft facility is very expensive. Although banks now offer overdraft facilities with little or no interest, the customer has to repay the loan within a certain time. This is not very easy for everyone. If interest rates are estimated, the customer is quickly in a debt trap from which he cannot get out quickly.