Apply for a loan online: what you should look out for

Digitalization has simplified the search for credit. You can compare online, apply online and even receive the money within a few hours. The way to the house bank or other local credit institutions is no longer necessary at all. But how safe is the digital process to get a loan really?

Whether it's to buy a house or to fulfill a big wish: A wide variety of situations can lead you to look for a loan. Photo: Imago/Francis Joseph Dean/Dean Pictures

What to look for in loan comparisons

In order to choose a suitable and favorable loan among the variety of options, an independent loan comparison is a stable foundation. But it is not enough to compare the debit interest rates and assume that the offer with the lowest interest rate is also the cheapest loan. Online comparisons create transparency within a few minutes and thus an advantage.

Who properly compares and considers all essential factors in comparison, excludes risks and concludes the right contract. The effective interest rate, the term and the monthly repayment should be compared. Since no one knows whether their own financial situation will change in the next few months, flexible repayment terms with free special payments and installment breaks are optimal. The more information on the comparison start page, the easier it is to compare two to three relevant loans.

Credit or condition inquiry?

Lenders advertise the lowest interest rate: the window rates. What conditions you get yourself depends on your own creditworthiness. How favorable or how expensive the favored credit is and whether an offer, which looks more expensive at first sight, is better, one finds out only by a personalized condition suggestion. The request to various lenders should always be made as a condition inquiry and not as a credit inquiry. If a loan is requested, a Schufa entry visible to all contractual partners is made.

If, on the other hand, one inquires about the personal conditions, the creditworthiness remains intact and one does not take any risk. The condition inquiry must contain this term in the subject line. Otherwise, the bank assumes a binding credit request and the entry in the Schufa is made. If you inquire at three or more banks, it gives the impression that you have received rejections, which in turn has a negative effect on your credit rating.

Credit without Schufa: A pitfall that can be expensive

There are many reasons for a small or larger loan. If a new car has to be purchased or if you want to give yourself and your family a little time off from everyday life, a small cash injection can be helpful.

Quickly you come across instant loans without Schufa and the promise of the lender that neither an entry nor a query is made. Nobody lends money without the security that the borrower is solvent. There are small loans without Schufa, but these have high interest rates and not infrequently come with additional contracts. Here is the risk that the loan is ultimately rejected – but the binding insurance with a two-year minimum term remains in place. Or the consumer:in is asked to pay the fees in advance, but the allegedly approved money does not arrive.

Conclusion: when it comes to applying for credit, you should choose the contractor with the utmost care. If one has found the apparently best offer, a condition inquiry gives insight into the interest and basic conditions. With instant loans without Schufa and Co. it is not uncommon to find dubious or disproportionately high-interest loans.

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