Are there any loans without a Credit bureau query?
In the memory of consumers has burnt down permanently, that the one who applies for a loan is also checked in advance on the Credit bureau. Who then needs a loan and has to reckon with bad creditworthiness, it is usually very difficult to get an offer from a bank. But there are also consumers who do not approve of forwarding a loan request to Credit bureau for a variety of reasons. If you need a loan for a variety of reasons, you can now access offers that do not require a Credit bureau request. The following will be discussed again in detail.
What special features apply to small loans without Credit bureau query?
Those who want to understand the special conditions for small loans without Credit bureau must understand how the bank lends and which risk factors play a role and how the risk of default is calculated. For a bank, the default risk increases with the term and amount of the loan and, of course, the client’s solvency.
It can be said that with increasing maturity and loan amount the solvency of the customer has to be getting better and better so as not to increase the default risk. If the bank incurs a default risk, it will only lend the loan at a higher interest rate. The interest thus always includes a risk component in addition to the costs for the financing and the profit premium. For a bank, a loan is nothing more than the comparison of a probability of default on the one hand and the compensation by an adequate interest on the other hand.
If a bank lends a loan without first obtaining a credit check on the Credit bureau, then it will reduce the risk either over a short term and or a relatively small loan amount.
So far, loans have always been awarded in connection with information about the Credit bureau. For some years, however, there are also credit institutions, the loans in a limited amount and with low duration even without such a query. Such offers can be found primarily at smaller institutions that have focused on the execution of such services. There are several reasons why institutes from the EU environment are becoming more active in Germany.
On the one hand, German consumers are considered to be significantly more solvent, and on the other, Germany is the most populous country in the European Union. The offer is aimed primarily at people who want to get a quick loan commitment to bridge a short cash shortage. The application process is comparable to that of a “normal” loan – in other words, the customer must first register.
This is followed by an internal scoring, ie the customer makes a few statements about his income. Thus, the bank can still perform a solvency assessment in the background, it is just not queried directly at the Credit bureau. If the application is then approved in the background system of the bank, nothing stands in the way of a quick loan payment.
No entry for small loan
Those who procure a short-term microcredit on this way have the advantage that they do not appear in a credit bureau. After all, the submission of a credit request for further inquiries also means that one or more loans have already been issued here. And with each additional loan, the default probability for a bank rises.
In addition, credit requests or existing loans are still noted for a certain period in the credit agency itself after repayment. And any unregistered loan – whether it is still existing or already repaid – will cause the scoring value to worsen. So if you want to plug a short-term liquidity shortage with the help of a small loan without Credit bureau, then you are on the right side with this type of loan.
What effects does the increased interest rate have on smaller loans?
As mentioned earlier, smaller loans are usually issued with a higher interest rate. Conversely, the term is also significantly shortened and in the fewest cases you will find offers with a term greater than one year. In fact, the microcredit can even be cheaper in terms of the absolute interest rate than a normal installment loan.
Here is a short example:
Accepted is a small loan of € 1,000 at an interest rate of 7% and a term of 12 months. Since the loan over the 12 months should also be repaid in full, so are on average to 500 euros to pay interest. In our example, that would be 35 euros. Compared to an installment loan of the same amount but with a term of 24 months, for example, an interest rate of approximately 3.5% is to be expected. In the first year, the average is 750 euros, in the second year, 375 euros. That makes 28.13 euros in the first year and 14.06 euros in the second year. In total, the longer-term loan in the same amount thus comes to 42.19 euros and is thus slightly more expensive than the higher-interest loan. It should be noted, however, that a quick repayment may not be possible for everyone within a year and therefore the longer term could be interesting.
Five tips for finding a small loan
Pay attention to the interest
The interest rates for a loan without Credit bureau are well above the interest on a installment loan. But you should not be put off and it may be worthwhile to pay a higher interest rate. The reason for this is that, in contrast to a normal installment loan, the term is longer and thus more interest is paid there in total, even though the interest rate was reported to be lower pa.
It is advisable to compare several offers for small loans, because here too there are significant differences.
You can not miss a legitimation
Even if the small loan without Credit bureau information generates no entry into the Credit bureau and is not queried here. If you apply for a loan, you always have to legitimize yourself. How the legitimacy has to look determines the lending bank, but usually a video legitimacy is made. This is fast and can be done directly on the laptop or tablet. Legitimation is usually the last step of the loan application and the loan is then paid out directly.
Short maturities and quick eradication
A small loan should also serve only to bridge a short-term liquidity bottleneck. This means that the repayment is usually very fast. In contrast to the installment loan, in which a higher sum is paid out and the rates are kept small by extending the repayment, the repayment is usually made after one year. If the liquidity bottleneck continues, one should consider whether a installment loan is the better alternative.
A small loan is not issued without conditions
Who believes that the bank does not conduct a credit check, just because the Credit bureau query is omitted, is wrong! Of course, the bank will examine the information provided by the borrower and, if necessary, evaluate it against its own scoring system.
The advantage is only that just not checked against the Credit bureau file and thereby no entry is made in the register. If you use several loans and more often install installment loans, you do not run the risk that the Credit bureau score will continue to deteriorate.
Small loans are usually issued by smaller specialized banks
The big credit institutions in Germany do not issue small loans. That’s why consumers should not be surprised if the supplier banks have unknown names. These are banks specializing in the allocation of this particular type of loan. And even if these are banks from other EU countries – every credit institution active in EU-Europe meets minimum legal standards.
So the borrower does not have to worry that he came across a dubious offer here. If you are not sure about the bank, you can find out from BaFin whether the bank has an authorization there.
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