Credit Loan in Germany

Are you a foreigner  and looking to get a loan in Germany? It may be a small loan to furnish your new apartment after moving to Germany, or a big loan to buy a car or a house in Germany. This article provide all the basic information you need to know about getting a credit loan in German, the types of loans in Germany, the requirements of getting a loan and other alternate ways to obtain a loan even if you have no credit score in Germany.

Types of Credit Loans in German

There are diffrent types of credit availble in Germany depending on the purpose of requiring the credit. The main types of credit loans are:

1. RatenKredit – Installment Loans i.e Personal Loan with variable monthly payment
2. RahmenKredit – Personal credit loan with fixed monthly payment
3. AutoKredit – Loan for buying a Car, Car Loans for auto financing in Germany. Read more about How to get a Car loan in Germany.
4. Wohnungskredit – Credit for a Home, Home Loan or House  Mortgage Loan
5. SofortKredit – Instant Credit

Requirements for getting a Credit Loan in Germany

Germany is a credit conservative country and does not offer credit loan easily if you do not meet some basic requirements. Therefore in order to obtain a credit loan in Germany from a bank, you will have to meet at least the following requirements:

1. A good SCHUFA score., i.e good credit rating
2. A permanent resident permit in Germany, or at least a resident permit or Visa that covers the entire period of loan
3. Regular and stable income. You should be able to provide your salary slips. If you are freelancer you can either show your previous year tax returns and monthly billing. If you get regular work from a single client, you can ask the company to write that you might be getting regular work from them and the possible amount you will earn from them.

If you have the above conditions, you can try for a loan in Germany from a bank, which usually has a lower interest rate. However, do not be disappointed since you can also get credit loans from other institutions if you do not have the above requirement, but with a little bit higher interest rate.

Types of institutions which provide credit loan in Germany

There are different institutions which provide loans in Germany. Depending on the institution, the rate of interest changes.

1.  Credit loan from Banks in Germany

They provide credit with the lowest interest rate. However, this comes at a cost. You will have to show a very good credit rating and a stable income. For this you would have to be living in Germany for at least a couple of years and should have a permanent resident permit or one with long validity period. It also provides It would therefore make sense to Examples are the Sparkasse banks, Volksbank etc,

• Lowest interest rate for Home loans
• Provides larger loan with longer repayment period
• Requires good credit score
• Usually 2 to 4 percent interest for long term house loans

2. Loan from Credit Institutions in Germany

They provide easier credit than the banks and most of them are online. However, the fees are usually higher than the Banks. some examples of such credit institutions in Germany are Barclays Credit or EasyCredit.

• Low interest rate for small and short term loans
• Specially for personal loans with small loan amount with faster payment terms specially for personal loans
• Requires a decent credit score
• usually between 4 to 10 percent interest on short term loans.

3. Peer-to-Peer lending providers in Germany

They are mainly websites which provide an interface between lenders and borrowers. In some cases, the investors just invest in the website which then selects the people who may borrow. This can be an option for foriegners who have not been in Germany for a long time but need a credit loan in Germany. They have high interest rate depends on the credit score. Therefore, if you have a decent credit score you can get a loan with lower interest rate compared to someone with negative credit score. Examples of peer-to-peer lending systems are Smava, and Lendico.

• High interest rate
• For personal loans with with no or negative SCHUFA score
• Can also get credit with negative credit score
• usually between 3 to 14 percent interest on short term loans.