There are many situations in which the saved funds are insufficient to cover the costs. Especially if they occur suddenly and unexpectedly. A payday loan from a bank or financial service provider can help. However, depending on the amount required, certain conditions must first be met or evidence must be provided in order to obtain such a loan. The details of these are explained below.
Requirements for applying for a payday loan
First, the bank checks whether the applicant has a permanent residence and a bank account in Germany. This serves as protection against possible attempts at fraud, for example by foreign gangs.
Then the regular income and expenses of the applicant are examined more closely. The aim of the bank is to find out whether the applicant is also able to provide the monthly installments for the loan, i.e. how it is in terms of economic creditworthiness. This is not just about the current situation but long-term planning, as a loan usually has to be repaid over several years.
Creation of a budget
Depending on the loan amount requested, a more or less extensive budget is drawn up. This includes all regular income (salary, pensions, payments from insurance, return on investments, etc.) and all regular expenses (rent, living expenses, car, credit installments, insurance, maintenance payments, etc.).
The bank can request evidence of the individual items if the information provided appears to be inconsistent. As a rule, a reasonably presented budget is accepted without asking.
Permanent employment outside the trial period
An employment term limit and the probationary period are critical with regard to income. At these points, lending can fail because the bank needs to ensure that the applicant can service the payday loan throughout the term. However, a guarantor with a permanent employment contract can help to avert the rejection. This also applies in the event that the bank refuses the payday loan due to insufficient income.
Collateral in the event of a lack of income
If the applicant has relevant assets to show, for example a property, this can be used as security. With this option, the bank will then look less closely at the other requirements, which will make it easier to obtain a loan.
Credit Bureau and personal creditworthiness
In addition to economic creditworthiness, Credit Bureau and personal creditworthiness (creditworthiness) also play a role.
The Credit Bureau file records all current loans, cell phone contracts and the like, as well as all payment defaults in the past. As soon as a negative entry appears here, it can happen that the bank rejects the loan application.
Personal creditworthiness as a prerequisite for payday loans
In addition, personal creditworthiness is also relevant, especially when the loan is applied for at the house bank. Then, for example, well-made loans from the past come into play, which can also simplify the process of issuing a new loan. In addition, the house bank has all the customer’s account movements in view and will not jeopardize a good customer relationship if the customer needs a loan.
Other conditions for payday loan – age of the borrower
In addition to the criteria already mentioned, it should be noted that banks also consider certain “risk groups” when it comes to granting a loan. For example, lending to a 75-year-old senior with a term of five to six years is unlikely. Even people with serious illnesses, for example those suffering from cancer, whose life expectancy is limited, will hardly be able to obtain a loan.
Residual debt insurance to secure payday loans
Here only collateral or guarantees help to get the money you need. As an alternative to the payday loans, expensive residual debt insurance policies can be taken out, which assume the residual debt in the event of death or the inability to work of the debtor. However, it should be noted here that the residual debt insurance, alternatively also life insurance or disability insurance, is also tied to criteria. So it can happen that if the applicant for the payday loan is too old, he cannot even take out this insurance.
Payday loans for the self-employed
As a rule, the self-employed have to undergo much tougher credit checks because they do not have a regular income that they can claim as security. In addition, mostly income tax notices from previous years, balance sheets and account statements are to be shown.
It is advantageous if you have been self-employed successfully for several years. On the other hand, if you first need start-up financing to be able to start your own business, you have to be able to present a very well-developed business plan. But even then he usually has to deal with high interest rates and expensive residual debt insurance.
Interesting alternative for self-employed and freelancers »Loans from private
Payday loans for the unemployed
Those who do not have a fixed income from gainful employment when applying for a loan usually have bad cards. Lending is only possible if additional collateral can be provided, such as real estate, building society contracts, insurance policies or the like. Alternatively, another person can provide a guarantee or take out the loan together with the applicant, thus still enabling the payday loan.
Nevertheless, it is important and sensible to take a well-thought-out repayment plan into the credit discussion. Because even for yourself, you should calculate well how you want to repay the monthly loan installments without a fixed, regular income.
- in addition: Loan for the unemployed
Payday loans for minors
In Germany, a loan can only be taken out by anyone who has reached the age of 18 and is therefore fully legally competent. However, young people usually need financial support when they start an apprenticeship and want or need to be independent from their parents.
However, the only way for them to get a loan is through an adult guarantee. As a rule, the parents then assume liability through their signature.
Payday loans for students
A special situation arises with students. You are of legal age, but generally do not yet have a regular income. However, since the financing of a study lasting several years is complex, there is often no way around a payday loan or a special student loan.
The advantage here is one who can demonstrate that he can complete his studies quickly and with good grades. Since loans specifically tailored to students only provide for repayment after they have completed their studies, the banks are signaled that the student will quickly find a well-paid job and will thus be able to handle the repayment. However, the prerequisites for this loan are that the customer remains with the bank.