An installment loan is particularly interesting for trainees and students, as the term and the amount of the monthly installment can be determined together with the bank. This is to prevent young people from getting into debt at the beginning of their training.
The installment loan is also not tied to any purpose, so the money can be used to finance a car or a new washing machine as well as to reschedule other loans. With an installment loan, the entire sum is made available to the borrower at once, and the loan is then repaid in monthly installments within a specified period.
As a rule, small loans are granted to trainees because they have a comparatively low income. Depending on their creditworthiness, the trainee can apply for a small loan of up to 4,000 euros. Terms are offered from 12 months to 6 years.
Advice from the bank is important
A visit to the bank and a consultation are the usual ways to apply for a loan. During the conversation, the terms of the installment loan are determined. Among other things, the advisor asks about the desired loan amount, what the money is planned for and when the loan should be made available.
The bank also collects personal and economic information – such as name, date of birth, address, occupation, marital status, income, children, financial circumstances, other loans and expenses. Under no circumstances should you lie here! In the event of incorrect information, the bank can otherwise terminate the loan directly and make it due. The lender is then also entitled to claims for damages.
Apprentices especially need collateral
As with conventional loans, the apprentice’s loan collateral is checked. The borrower often has to provide evidence of his income using the past three pay slips. The trainee must also show his / her regular expenses, bank statements are usually sufficient. Other forms of collateral for the credit institute are, for example, the vehicle registration document or a guarantee. The parents of the trainee can be included in the contract as guarantors if they can no longer pay the loan installments. Because then the parents are asked.
A query is also obtained from the Schufa via the borrower. Banks use this process to protect themselves from losses. Because if a borrower has already applied for a loan and he cannot repay it, this will be reported to the Schufa. This message is used to protect other banks from lending further to this customer. All of this data forms the basis of the budget calculation, which shows whether the borrower can repay the loan – and if so, in what amount and for what period.
The conditions depend on the creditworthiness
A credit scoring is created with the collected personal data, which is now available to the financial institution. Although this differs from bank to bank, a point evaluation process is generally used, with the help of which the creditworthiness is classified as a number. Using this number, the bank can now determine the terms for the loan.
Anyone who is not sure what creditworthiness he or she can expect from a bank can submit a free application to Schufa for notification of their own creditworthiness. Not only overdrawn accounts play a role here, but even the number of current contracts (smartphone, internet, telephone, TV). Consumers in the form of trainees should therefore know and check their own finances very well.
Instant loan for trainees? Possible, but expensive
Another option for obtaining a trainee loan is on the Internet. Because now trainees can also apply for an instant loan online. The loan amounts are not very high with this type of loan and are repaid in monthly installments within a reasonable period. As the name suggests, the borrower can quickly access the borrowed money on his checking account.
Financial institutions must always provide the following information:
- Net loan amount; the disbursement amount, i.e. the loan amount
- the term in months
- Monthly rate; usually remains the same over the entire duration of the loan
- Information about taking out residual debt insurance
- Total repayment amount; this results from the disbursement amount and the interest on the loan
- the borrowing rate (nominal interest rate)
- the effective annual interest rate
A residual debt insurance is often taken out for loans. This has the task of protecting against occupational disability, involuntary unemployment or even the death of the borrower. In most cases, the cost of this insurance is included in the effective annual interest rate.
Regardless of whether it is a small loan, car loan, home loan or personal loan – the trainee should consult his parents and the loan provider well, compare offers and calmly choose the model that is most suitable for him. Once all the conditions have been clarified, the loan agreement is concluded. After that, the contract is valid and the loan amount can be transferred to the borrower’s bank account.
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