Also lending in the most difficult cases, this heading is more and more about credit offers. But most loan applications are not paid out. The most common reason that banks refuse a loan request is bad credit, and if there are negative entries, there is most likely no loan.
Negative entries can be made up of various factors. This can be an unpaid and remindered invoice, a canceled loan, an oath of disclosure or bankruptcy proceedings. The economic situation of the loan seeker also plays a role. Does he have a permanent job or is he unemployed? Can he provide credit protection or not. Payment irregularities that have happened in the past do not make it possible to grant loans today, the bank sees this as a risk. Still, there can be a loan for difficult cases.
The loan for difficult cases
Three points must be met when granting credit. That is the sufficient and regulated incoming income, a permanent job and a positive Credit Bureau. What also has a negative effect is the servicing of other loans. The bank also sees an exclusion here, since it can almost be foreseen that abnormalities may occur again. In short, the credit seeker’s creditworthiness no longer exists. All further efforts to get a loan from one or the other bank fail. Should the loan seeker nevertheless find a loan for difficult cases, he can assume that he is not reputable.
Dubious credit brokers advertise these loan offers and will do nothing but collect fees. Fees prior to a loan approval are not legal. If consumers do not receive credit in their bad situation, they should not yet pay legitimate fees. A reputable credit broker will not charge upfront fees and will also tell the loan seeker that they cannot provide credit.
In addition to the dishonest practices of intermediaries, there is also the awarding of insurance contracts that are made dependent on a loan commitment.
There will not be a normal loan for a loan seeker unless he brings other security. This could be, for example, a guarantor or a co-applicant, capital-building life insurance, building society contracts, value deposits that you cannot get to, or a private pension scheme.
The best loan guarantee for a difficult case loan is a guarantor. However, certain requirements must be met by him. He must be solvent, have a permanent job and also a clean Credit Bureau. A guarantee is not a small proof of friendship, as some people think, a guarantee, if it was made too hastily, can mean financial ruin. If the borrower has payment problems, the guarantor is immediately obliged to continue paying the loan.
Not only is his own credit rating reduced, he also has to pay the loan for his own financial obligations. Since the guarantee is entered in the Credit Bureau, a problem can arise. If the guarantor needs a loan himself, he cannot be creditworthy, since the guarantee is included in his household bill. If the guarantor has taken on financial guarantees, this can lead to bankruptcy. The same thing happens to a co-applicant. He has the same duties as a guarantor. If the borrower does not pay, he has to pay for it.
A co-applicant could take out a loan for difficult cases in his name. But the trust base should be great. The advantage of this is that there are better conditions for the loan seeker, which means that the rate level will also be lower.
If neither a guarantor nor a co-applicant can be named, other credit guarantees could be provided. Anyone who has a debt-free property or a life insurance that has been saved for years could use these things as credit protection.
All of this has its advantages and disadvantages. The loan for difficult cases should therefore only be taken out if there is no other choice. For example, if a negative entry in Credit Bureau threatens again because an invoice cannot be paid. Anyone who makes himself available for a surety should never sign a guarantee with which consumer goods are to be purchased. In such a difficult situation, you should hold your money together and wait until the finances are settled before buying consumer goods. If the loan seeker is unemployed, if he tries to get a job, he could put his Credit Bureau in order and, if necessary, ward off private bankruptcy.