A credit without an end use is understood as an installment loan, which is taken up in order to fulfill consumer wishes. Usually, banks want to know the purpose. http://martingore.net/five-marketing-ideas-from-the-road/ for more.
But many borrowers do not want the lender to learn what the loan is being used for without its purpose. That’s her right too. However, there are types of credit where the indication of the purpose can be beneficial.
The loan without a purpose – useful or not?
If the loan seeker is looking for a cheap provider with a credit comparison, there will always be a question and that is the purpose of the loan. Normally then a field must be filled in by car, trade or rescheduling. The specifications vary from provider to provider.
The normal use is mostly consumer credit. Also called Acquisition Loan or Consumer Loan. In general, there is no objection that the purpose is stated. Examples of an unremedied loan would be cosmetic loans, bridging loans or consumer electronics loans.
For these loans, the bank will determine the creditworthiness of the client according to the standard factors such as sufficient and regular income, debts charged or neutral or any collateral.
The loan for no purpose – to specify the reason for a loan?
Anyone who specifies the purpose of a loan can get from banks of cheaper credit. The use often gives the bank the certainty that they will get their money back. In addition, a reason for borrowing can also be considered as collateral for the bank and thus has an impact on interest rates.
So can the loan for apartment, even if it is not a classic real estate financing. So the property can be presented as collateral for the loan. The credit opportunities will increase significantly and interest rates will fall. However, the customer may then use the credit only the apartment. The same picture can be seen with a car loan or the loan for a motorcycle.
Here the car or the motorcycle could be deposited as security. In the event of a loan default, the bank could seize and auction the car. If all other requirements of the customer are met, he can count on a good interest rate here as well.
The loan without purpose – the good credit
Who wants to specify a purpose or not, ultimately decides their own financial position. Anyone who can post a sufficient and regular income will receive a favorable interest rate from the bank anyway. Then the customer does not have to specify the apartment or the car as collateral.
With perfect credit rating, the purpose is irrelevant. The customer can specify it but is not necessarily dependent on it. Another picture shows if the credit rating is bad. Here, specifying the intended use can also guarantee a loan. Before banks with bad credit ratings approve a pure consumer loan, the customer would have to provide other collateral.
Basically, therefore, a loan can be taken without purpose. The loan can be taken up for new furniture, for a trip or for a household appliance. These things do not interest the bank, the purpose is free.
The loan without purpose – the small loan
Anyone who makes a loan application and does not specify a purpose, but should think about what the credit should now be taken. In addition, he needs to know what the monthly load may be to fit the budget. If you take on a loan, you may not be able to pay the installments anymore, it will lead to a loan default with unpleasant consequences.
Therefore, loan seekers should make a credit comparison before applying for credit. Thus, the individual offers can be compared with each other on installment, duration and interest rate. In the case of a loan without a purpose, customers usually have to expect a slightly higher interest rate. Who compares the offers with each other but should not only pay attention to the interest rate, but generally to other fees.
Anyone who uses a credit comparison can see how the term affects the installment rate. So there are low rates for a long runtime and vice versa.
The loan without purpose – the funds fall
Whether a purpose-bound or purpose-bound loan, at the beginning there should always be the coffers. The revenue against the expenses are calculated against each other. Ideally, there will be a surplus that can at least partially serve as a credit.
A rate should always be chosen so that it can be paid if the income is reduced. Consider here a sudden unemployment or a serious illness with subsequent occupational disability. Both scenarios are unpredictable and reduce income. Especially if the loan has to be paid for many years, there may be a financial shortage here or there.
Therefore, customers should make sure that one or more installment breaks are allowed in the loan agreement. For employees who can expect special payments over the course of the year, it is important that the loan agreement allows for special repayments.
The loan without use – also with the personal loan without?
If you do not get a loan from a regular bank, you can search for a personal loan on the internet. There are so-called credit marketplaces where private investors and loan seekers are brought together. There, the approval opportunities are not too strict as is often the case with banks.
Most loan seekers looking for such a loan will not get credit from ordinary banks because of their poor credit rating, but also often because of negative entries in the Schufa.The question of a purpose is rather subjective. If the purpose of a personal loan is stated, there is no need to present a countervalue for the loan.
It is much more important that the reason for the credit is given so that trust can be built up. Thus, a private loan for a rescheduling may well be useful to lower interest rates. If the borrower takes out a loan for consumer needs and informs the investors, then the conditions are likely to be worse.