Month: February 2020

Loans are part of everyday life for the majority of German households. The little house in the countryside, a new car or the renovation of the home furnishings are mainly financed with a loan. Up until a few years ago, your own bank was the first point of contact for all credit issues. After the outbreak of the financial crisis, however, the confidence of many bank customers in the credit institutions and the restrictive lending of the banks caused additional displeasure. Against this background, payday loans created a new segment in the financial sector.

 

The payday loan: fast and unbureaucratic

The payday loan is characterized by its quick and unbureaucratichandling. With this form of financing, unexpected gaps in the household budget can be plugged and material needs can be easily fulfilled. Often it is suddenly occurring circumstances that require an increased financial need. An unscheduled repair of the car, a broken washing machine, or the financing of a new children’s room can create serious gaps in the budget. The overdraft of the checking account is not a real alternative due to the enormous interest charge.

Credit negotiations with the house bank over an installment loan can take a long time and the own fixed deposits are usually not available in the short term. In this situation, the payday loan offers an elegant solution. It is one of the fastest and most effective solutions to meet short-term financial needs. Lengthy negotiations with a bank employee are no longer necessary, as are long waiting times for the loan to be approved. It is not necessary to disclose all financial circumstances in detail and a Schufa entry is usually not made either. On the other hand, those who value the financial competence of a bank still have the option to apply for a $ 30,000 loan from MoneyEuro Link Bank.

 

The principle of operation of a payday loan

The payday loan is a loan that the borrower receives from an unknown private individual. Contrary to the first impression, it is not a loan from friends or acquaintances. In this form of loan, special online portals act as an intermediary between the lender and the loan seeker. There both parties have the opportunity to post and publish their offer. Lenders and recipients can now contact each other and negotiate the terms for the loan. The conditions, the repayment period, the amount of the loan and the collateral are agreed. Once all open questions have been resolved, the loan is paid out and the recipient can freely dispose of the entire amount.

Everyone is talking about FinTech in a continuous and pervasive way. Often not in the right way: some myths to dispel and factors that are still not entirely clear, especially in P2P lending dedicated to people, resist. We tried to list the five advantages of the sector, from the point of view of the applicant and the real economy. Here they are.

 

Speed

One of the major strengths of P2P lending is the time that saves. In traditional consumer credit, it can take up to a week from the moment in which the bank receives all the required documentation to that in which the desired amount arrives on the current account (with overall times that can in some cases reach up to 3 or 4 weeks.). Online, the answer on the outcome of the question is practically in real time: once the data has been entered on the platform, the feasibility of the request is verified (in essence it is verified that there are no protests or delays). When the platform receives the ok, the customer can send the complete documentation as requested: from the moment of correct reception of the same, the platform takes 48 hours to carry out the preliminary investigation and to transfer the money to the account. of the customer.

 

Digital and flexible experience

All the procedure takes place online, without the mediation of consultants and without the need to go to the counter. This results in further savings of time and kilometers of ground to go to a physical location on several occasions. The digital nature of the experience guarantees flexibility. It is the customer who decides times and ways of interaction and, while not physically interfacing with a consultant, can enjoy telephone assistance always available and personalized.

 

Disintermediation

P2P lending is the market where the two sides of the loan relationship meet. On the one hand, the applicant, who needs funding for different purposes – from buying a car, to renovating a home, to financing a holiday or a study period abroad, just to give some examples. On the other, the lender who agrees to lend to a diversified basket of borrowers and signs a contract detailing the timing and methods of returning the capital.

 

Competitive interest rates

We immediately clear the field of a false belief: that P2P lending applies high interest rates in exchange for the advantages described above in terms of speed and convenience of use. The rates applied depend on two characteristics: the customer’s risk profile (for example in the Sparkborrow Financing classification there are three) and the match between supply and demand (the lender can request to receive a given rate and wait for the market to appear someone willing to pay him). For these reasons, interest rates vary over time: in the last four months, the TANs registered on the Sparkborrow Financing platform have moved between 2.41% and 5.16%. In the lower part of the range it is a very competitive value compared to the rates applied by traditional operators.

 

The ethics of P2P lending between people

True, everything happens online through the Sparkborrow Financing platform. But this must not make us lose sight of the focus of P2P lending between people: that is, people. At the center of FinTech there is always man and this is why it works. Without considering that this market segment contains in itself a strong ethical content: investor side because they finance the dreams and projects of other people; on the applicant’s side because a gap in the supply of credit is facilitated which facilitate domestic consumption, that is, it supports the demand for products that contributes to GDP growth. Somehow it feeds the real economy in a joint effort that involves, we like to repeat it once again, the people.

 

Trainees are mentioned in an informal manner as trainees. The short name does not only belong to the youth jargon, but is also used by health insurance companies and banks if they are aimed specifically at young people.

In addition to the classic start of vocational training after graduation, more and more young people are initially working in temporary jobs, which is unavoidable for a few professions such as professional drivers due to a legal minimum age. At the same time, employers are increasingly demanding the Abitur as an application prerequisite for an apprenticeship position, so that more and more trainees are of legal age and are therefore generally entitled to borrow.

Usual loans for trainees

Some banks grant trainees a small overdraft facility on their checking account when they reach the age of majority. At a few credit card companies, trainees generally receive a credit limit of around one thousand USD without further proof. Payment in installments is also a possible loan for trainees without a co-applicant and for most orders, especially since mail order companies rarely ask about the employment relationship.

However, taking out a larger bank loan is difficult for trainees because their income is just enough to live on. An exception is if they can use their training allowance entirely as pocket money and thus also for loan repayment. In this case, banks are often satisfied with a corresponding certificate from the parents without having to appear as a co-applicant at the same time.

It depends on the bank whether parental support is taken into account as income for the appraisal of repayability for trainees living outside the parents’ home. A loan for trainees without co-applicants can also be taken out via a website for arranging loans between private individuals, since lenders registered there prefer to grant loans to applicants who find it difficult to obtain a loan from banks. Low monthly credit rates are important for trainees, which are guaranteed by a long loan term.

Special loans for trainees

Lite lender can apply for a loan for trainees without a co-applicant or guarantor for the final training phase without any further requirements. Trainees are also paid the training loan if they have already forfeited Credit Bureau negative entries, because the only reason for exclusion is applied for personal bankruptcy.

In addition to the low interest rate, the fact that a loan taken out via Lite lender is granted to trainees without a co-applicant and only has to be repaid after completing the training. If the trainee does not pass his final exam on the first attempt, the bank postpones the start of the repayment phase after submitting the relevant evidence.

Loans for trainees via Lite lender are not free of interest, but have lower interest rates than average consumer loans. Some private banks and cooperative banks also provide training loans comparable to Lite lender, but these usually place higher demands on Credit Bureau information.