You are a freelance artist in desperate need of fresh capital, but have often heard and read that artists generally have a hard time getting a fair loan? Admittedly: Freelancers and artists are not among the most popular target groups of German banks and commercial credit institutions, as their respective income situations can often be classified as irregular and unsecured. However, it is a myth that artists have virtually no chance of obtaining a fast, flexible and inexpensive loan for artists!
In this article, the team of KREDIT 123 discusses the topic of "credit for artists" and gives important tips and advice on how you as an artist can get urgently needed money even despite a precarious income situation and even without SCHUFA.
There are interesting ways and means to obtain a favorable loan even as a freelancer! So do not hang your head just because the first attempts did not work out! With our tips it may still work out with the fair loan for artists!
Credit for artists from German banks and commercial credit institutions
If you are an artist and want to take out a loan, you will often first contact your bank. Before doing so, however, you should be aware of the basic requirements that must be met in order to apply for a loan for artists, and how German banks and credit institutions generally check the creditworthiness of an applicant.
Requirements for applying for a loan for artists
- Age of majority and full legal capacity
- Official residence in the Federal Republic of Germany
- Current account at a German bank
- Various proofs of the income situation
- Creditworthiness and credit standing
If a credit-seeking artist can meet these requirements, he or she should look into the most important criteria that German banks and commercial lending institutions use to check an applicant's creditworthiness.
Examination of the applicant's income situation
First of all, it is necessary to check the applicant's income. The bank checks a wide range of documents in order to get a very precise picture of the income situation of the artist seeking credit. In the case of freelance artists, however, it is often the case that no regular income can be proven. And German banks and credit institutions are not particularly fond of this!
Checking the SCHUFA records of the applicant artist
The second important criterion, which is checked by German banks during the creditworthiness check, is the SCHUFA score of the applicant. The SCHUFA score is composed of the entries that are deposited for a person at the German credit agency SCHUFA.
If the corresponding value is very low or even negative, the creditworthiness of the artist seeking credit is to be classified as poor. If, on the other hand, the value is high, it indicates a high creditworthiness.
Once a year, artists can request a free SCHUFA report in order to check their respective data and, if applicable. Be able to have outdated or incorrect entries deleted. Credit seekers should make use of this option. Because the better and cleaner the SCHUFA data are, the higher are also the chances to receive a flexible and favorable credit for artists.
Examination of personal and material loan collateral
A very important criterion, which is examined with the creditworthiness examination and may not be forgotten, is the possibility of the position of personal and/or material loan securities. For can these loan collateral be provided to effectively secure a loan, one increases his chances immensely to get a fast and cheap loan for artists.
Personal loan collateral to secure a loan for artists
Personal loan collateral includes the inclusion of another borrower and the registration of a guarantee. While in the first type of personal security a co-applicant is directly involved in the conclusion of the contract and is therefore liable for the repayment of the monthly installments in the same way as the main applicant, in the second variant, the surety, the registered guarantor is liable only if the borrower is no longer able to repay his loan. The guarantor is therefore a third party who only has to step in if the borrower is insolvent.
As a rule, guarantees can also be registered with reservations. This means that the guarantor really only has to pay when all conceivable enforcement measures have actually already been applied and the corresponding borrower really no longer has any assets at his disposal. Possibly an argument, in order to induce a still doubting guarantor nevertheless still to the signature!?
Material loan collateral to secure a loan for artists
Material loan collateral, also known as real loan collateral, includes the mortgage, the land charge or the pledging of larger assets to partially or fully secure the loan. In the case of a mortgage, the lending bank is granted a lien on a house or land, which can be enforced if the loan is no longer repaid. Jewelry, watches, cars, stocks or securities can also act as collateral for the loan.
Since collateral can be a strong factor in persuading a still doubtful bank to quickly approve a loan for artists, artists seeking credit should definitely know what collateral options they have in the first place BEFORE they enter into credit negotiations with the (house) bank. Of course, the more convincing you can appear at the credit interview and the more aces you have up your sleeve, the more likely you are to get a flexible and favorable loan for artists!
Credit for artists without SCHUFA from foreign banks
If you simply don't want to succeed in getting a loan from a German bank as an artist, you naturally have the option of trying abroad. Especially in Switzerland or Liechtenstein, there are credit institutions and banks that grant loans to artists and freelancers even when German banks say a blanket "no". Especially if the SCHUFA score is poor, but the income situation can be classified as regular, it is very worth considering applying for a loan for artists without SCHUFA abroad.
Swiss and Liechtenstein banks use other methods to check the creditworthiness of an applicant. The query of the SCHUFA data does not belong here, however, since foreign credit institutions are not contractual partners of the German credit agency SCHUFA. For this reason, the approval of loans without SCHUFA is possible abroad, while the same is almost impossible in Germany.
A credit without SCHUFA, which is also called Swiss credit because it is often issued in Switzerland, does not only mean that there is no SCHUFA check during the credit assessment process. It also does not result in a SCHUFA entry. Even civil servants or permanent employees with a high regular income apply for loans without SCHUFA for the reason not to "mess up" their SCHUFA score with a consumer loan. This could have a negative impact on the conditions and interest rates of a planned construction financing.
Provision of collateral for the loan for freelancers without SCHUFA
In order to get more favorable interest rates and better conditions, artists and freelancers can of course also provide personal or material collateral to secure the loan without SCHUFA. No matter with whom the loan is applied for: Borrowers should always check whether they can get a more flexible and more favorable loan through collateral!
Payment of upfront costs by dubious credit brokers
Since the demand for SCHUFA-free credits for artists and freelancers is not exactly small, unfortunately also unserious credit mediators and black sheep in this segment spread, which require completely unabashedly Vorkosten, even if the respective credit applications are not yet even approved. For this reason, foreign loans without SCHUFA should be used with caution before paying upfront costs and fees!
Loan for artists from private
Furthermore, there is the option of being able to take out a loan as an artist via private lenders. Before digitalization, private lenders were primarily lenders from one's own family or close circle of acquaintances. Today can be made over special Internet sides also numerous unknown private financiers out-finds, which lend naturally also to artists or self-employed persons.
Credit for artists from family members or acquaintances
Great luck has the freelance artist who has wealthy relatives or acquaintances who grant him a low-interest loan for artists. Often it is even possible to obtain an interest-free loan because family members or acquaintances simply want to support you in the best possible way.
With the interest-free loan, however, it is important to ensure that tax traps can be excluded. Because if a transaction takes place, which lies over the tax-free amount for donations, in principle the same could be evaluated by the tax office first as a gift to be taxed! And that would be anything but pleasant!
Credit for artists from unknown private lenders
Rather as the last straw to see, to which artists can cling, is the credit from private, which is issued by unknown private lenders. For this usually has relatively high interest rates, which should be understandable, however, since the corresponding lenders also have a relatively high default risk. And risks in lending almost always inevitably lead to higher APRs.
Read all conditions thoroughly!
Since among private lenders there are also those who are not so reputable and thus belong to the so-called loan sharks, artists should keep a watchful eye on the conditions and clauses in the loan agreement when taking out loans from private sources. Because here the devil is often in the details.
Due to the high degree of customization that is possible when granting loans for artists from private sources, unscheduled repayment options and cancellation rights, for example, can simply be deleted from the loan agreement. Also other consumer protection rights fall with unseriosen offerers not rarely simply under the table. Therefore, caution is advised here!
Think about the brokerage fees to be paid to online portals!
Often overlooked in the loan for artists from private that when using online portals that bring borrowers and private lenders together, in the case of success, brokerage fees are incurred. These increase then naturally the effective annual interest of the usually anyway already expensive credit for artists. Here, too, attentiveness and a thorough examination are advisable!
KfW loan for freelance artists, freelancers and start-ups
An extremely interesting possibility for artists to take out a loan is to apply for a KfW loan or a KfW start-up loan. Behind the abbreviation KfW is the German Kreditanstalt fur Wiederaufbau (Reconstruction Loan Corporation), which has a variety of very attractive programs for artists, freelancers and start-ups up its sleeve. This is because the KfW has dedicated itself to helping self-employed and freelance people get on their feet with grants, support programs and loans. So be sure to take a look here! You may be able to obtain a fair loan for artists with extremely favorable conditions through the KfW!
Purposes of loans for artists
If the loan for artists is a freely available consumer loan, it can be used for a variety of purposes and purchase items. If it is earmarked, however, it can only be used for the purpose described in the contract.
For example, a car loan for artists can be used only for the purchase of a car, and a modernization loan for artists can be used only for the modernization or renovation of a building. There are also working capital loans and investment loans for artists and freelancers, respectively, which are also earmarked.
Mini loan or. Small loan for artists
If the consumer loan taken out has only a short term and a small loan amount up to 10.If the amount is less than EUR 000, it is a mini-loan or a loan. Small loan for artists. This type of loan is usually paid out very quickly, often even immediately. For this reason, the small loan for artists is also popularly known as a lightning loan, express loan or instant loan for artists.
Car loan for artists
The big advantage of the car loan over the consumer loan is that it usually has more favorable interest rates. Why this is so? The car to be purchased can be put up as tangible collateral for the loan, thus considerably reducing the lender's default risk.
So artists who want to finance a new car should definitely look for low-interest car loans, not consumer loans. It would not be very intelligent to take out a more expensive consumer loan for artists in order to be able to finance a car with it in the end!
Modernization loan for artists
Who would like to reorganize, renovate or modernize its building, needs a modernization credit. This is also earmarked and relatively low-interest, especially since the building to be modernized can be provided by the borrower as factual loan collateral.
Working capital loan for artists
Like any other freelancer, artists need working capital. These can be acquired, for example, with the help of an earmarked working capital loan for artists. Since the intended purpose is usually rather outlined here and not formulated too strictly, this loan can also be used for the payment of already due invoices of, for example, business partners.
Investment credit for artists
If larger purchases or capital goods must be procured, an investment credit for artists is in demand. Unlike the working capital loan, the corresponding purchase items can be provided as collateral for the loan, which is why investment loans for artists usually have better conditions than working capital loans for artists.
Conclusion of KREDIT 123 on the subject of credit for artists
Artists can certainly get a fast, flexible and cheap loan for artists, even if many are of the opposite opinion. Even with an uncertain income situation or a negative SCHUFA entry, there are still ways to get fresh money.
In principle, a loan for artists can be applied for from German or foreign banks and credit institutions as well as from private lenders within or outside the family circle. A particularly noteworthy option is to take out a founder's loan with the Kreditanstalt fur Wiederaufbau (KfW), since this institution provides attractive loans with gratifyingly favorable debit interest rates if all requirements are met.
The most favorable and most flexible credit for artists is the credit from private, which is provided by family members or friends. The private loan, which is issued by unknown private lenders, can be considered rather expensive, especially since these can often only be found through online portals, which in the case of success then also demand brokerage fees, which make the borrowing even more expensive.
Clearly understandable, written credit agreement
Whoever wants to take out a loan as an artist, no matter who the lender is, should always make sure that there is a clearly understandable, written loan agreement that regulates all conditions by mutual agreement and is signed by both parties to the contract. Also with credits with favorable interest and interest-free loans, which are made available by acquaintance, it is almost essential to close a written credit agreement, in order to prevent later misunderstandings already in the apron. It should be obvious that a professional and clearly formulated loan agreement also offers protection against the fraudulent methods of loan sharks!
Comparison of different credit offers for artists
Last but not least, the entire KREDIT 123 team recommends that when looking for a loan for artists, it is essential to obtain as many different loan offers as possible in order to be able to compare them with each other before concluding the contract. You often don't believe how much money you can save with a detailed loan comparison! So if you are intelligent and think economically, you will certainly not refrain from carrying out a credit comparison in order to be able to locate the best and most favorable credit for artists!