The instant loan is the “turbo option” to apply for a loan. This high speed begins with the application for credit – usually online – and extends to the disbursement, which is sometimes 48 to 72 hours after the first credit request. A definition of how the application is made and for which target groups this loan is available is shown in this article.
What is an instant loan?
This loan has a pretty promotional name. “Immediately” implies that the money the borrower wants to lend to a bank is on the same day. Of course it does not work that fast, although the loan undoubtedly scores with the shortest processing period of all types of credit.
Despite the auspicious name, the payout can only follow the application for a loan, including private credit bureau information. The procedure to apply for a loan remains the same as the repayment obligation. An instant loan is a “regular” loan insofar as a classic repayment also takes place here – when, in what installments and at which loan interest rate is a contractual component.
However, the loan request is processed much faster than other loans. This means that usually follows directly on the loan request an instant confirmation or an immediate rejection . Attention: At this point consumers have to read carefully. An immediate commitment does not mean that money will flow the same day. Only if the lender identifies an “immediate payout” can the lender quickly dispose of the money.
Who awards instant loans?
Above all, this loan is a product that has direct banks in its portfolio and there is a good reason for that. The direct bank offers its customers 24/7 banking services 24 hours a day, seven days a week. Only with this basic orientation is it also possible for them to offer this loan – despite the regular application procedure, including obtaining the private credit bureau information.
The alternative is the house bank. Who gets along well with the bank adviser of the house bank and maintains a long-standing business relationship, which could also be lucky with house bank and get a quick loan. This can not compete with the online instant loan, especially with regard to the availability of money. While the borrower is talking to the bank adviser, clarifying conditions, perhaps going to the branch or receiving the documents by e-mail and processing them digitally, the online instant loan with the direct bank has long since been completed.
This is how the application for an instant loan works
The reasons to claim an instant loan are many. Be it that the family car breaks down, a new washing machine is needed or other unforeseen events make sure that short-term money is needed.
As a rule, consumers consult a comparison computer in this exceptional situation and conduct an instant loan comparison. With this, they go the direct route to personal instant loans and save interest by comparing them. The four steps of instant loan application:
Step 1: The credit comparison
The credit comparison works just as simple as the instant loan, as with many other loan options:
- Enter net loan amount
- Set the runtime
- Specify the purpose
- Start credit calculation
Fed up with this information, potential borrowers receive a list of results that shows the lending bank, the monthly installment, the borrowing rate and the annual percentage rate of charge, and provides more information about eradication at the click of a mouse.
Step 2: Make a loan request
In order to make a non-binding and free loan request, you must specify how many borrowers there are. Tip: Registering a second borrower often helps you to get more favorable terms. Afterwards, the personal data are to be deposited and a proven income proven or information about the financial situation must be provided.
Note: This form of credit request does not create a negative private credit bureau entry. The score value (private credit bureau score) remains untouched – despite private credit bureau’s request.
This request ends with a positive or negative decision , that is: The bank checks whether the borrower has a negative entry to the private credit bureau and also checks other decision criteria that speak in favor of or against lending.
Step 3: Received confirmation. Submit documents.
In order to get the money as quickly as possible, the required documents must be submitted within a very short time. These include, for example, actual proof of income. Above all, the process of so-called legitimacy is important in online credit. This is necessary so that the bank can ensure that the borrower is really the person whose details appear in the loan request.
Basically, there are two variants here:
- the PostIdent and
- the VideoIdent procedure.
Due to time constraints, the variant “Video-Ident” (“Online-Ident”) is much more useful and more comfortable. For the sake of completeness, both options are compared in the following table:
|PostIdent||Video identification method|
|description||In this way, the postal worker usually checks directly in the store or as a postman at the front door, whether the borrower fits in persona to the details in the loan application.||In this way, the applicant does not have to move a meter, because the VideoIdent process runs directly on the computer. Online, the adjustment of personal data. An authorized employee checks the data in the video chat. A confirmation is given by TAN. The VideoIdent process requires a good-resolution camera as the ID card and applicant are photographed. If the image quality is too poor, the VideoIdent process can not be used.|
|advantages||The process is cheap, fast and requires no expertise.||The time factor that is particularly important in online instant loan is the biggest benefit of this process. Borrowers can quickly and easily carry out the legitimization right after the possible immediate commitment.|
|disadvantage||Especially the way to the branch – the biggest disadvantage – makes this procedure useless for the instant loan.||The basic requirement for video identification is a stable and, above all, secure internet connection.|
Step 4: Received payment
The payment is very timely at many banks, although not “immediately” after the loan application. How fast the money lands on the account depends on the lending bank itself and also on the bank of the recipient. Often, banks show how fast they can make the money available after the instant online pledge. These figures are only indicative, but are often 48 to 72 hours.
What should be considered before the conclusion of an instant loan?
Anyone opting for an online application with online instant confirmation must pay attention to the same parameters as a regular installment loan.
Is the purchase, which requires the immediate loan, mandatory at the present time required?
At this point, every consumer should ask himself if it would not be possible to be more economical and make the purchase without incurring debt. So from a financial point of view, it may be more sensible to save a few more months on the financing purpose than to take over an instant loan. If borrowing makes sense even after considering the personal (financial) situation, nothing speaks against borrowing.
Is the bank that promotes the cheapest interest really serious?
A look at the contract details is mandatory with every borrowing. It is important – at German banks and foreign banks – that the provider operates transparently and seriously. Cheap terms are tempting, but only on fair terms is an online instant loan a top credit.
Is your own creditworthiness enough to repay the loan within the agreed timeframe?
A negative private credit bureau entry usually leads to the rejection of the instant loan . But that also means: In the past, according to private credit bureau, it was not the best thing to do with the payment behavior of the borrower. If this is the case, a rethinking should take place – and not the alternative route through a debt-free loan should be chosen.
Is the borrowing rate or the effective interest rate decisive?
The debit interest is only the rental fee that the bank charges. The problem with that is that the nominal interest rate does not include any additional costs . More meaningful against this background is the effective interest rate , it really covers all credit costs.
How should I choose the repayment term?
As far as duration is concerned, the shorter the repayment term, the cheaper the loan. At the same time, the burden on the household budget increases due to the monthly repayment rates. In this respect, borrowers should always choose the term as short as possible, but as long as necessary. To determine this period, it is worthwhile to carry out a household bill before borrowing . It shows how much money in the month after deduction of all living expenses can still be made for a loan repayment.
Is there an instant loan without private credit bureau?
The answer to this question is yes. What follows, however, is a big “but.” Basically, it is not advisable to take out a private credit bureau-free loan. A private credit bureaufreies loan is so called, because in the lending no private credit bureau query by the bank. In other words, the bank has no information on how it is charged with the payment behavior of the applicant. As a result, the credit default risk for the bank is comparatively high – and the lender only assumes a high level of risk if he receives correspondingly high interest rates for the loan.
In addition, a negative entry is not only a warning signal for the bank, but also for the applicant. A negative entry may mean that a loan has not been serviced or another payment obligation has not been met – as a result of which an entry in the private credit bureau file has come about. In this respect, the “legacy” should first be settled before a new loan is taken.
Is there an instant loan for students, unemployed, self-employed or apprentices?
One thing all these people have in common: They usually have only a small budget or no regular income. Basically, an installment loan for these target groups is only possible if there are collateral.
- Is there an instant loan for students? Usually not. The exception may be smaller sums, in which, for example, the parents act as guarantors.
- Is there an instant loan for the unemployed? No, the unemployed receive no loans from reputable banks.
- Is there an instant loan for the self-employed? Yes, if the credit rating is positive and the self-employed person can prove his income through a current BWA or income tax assessment.
- Is there an instant loan for trainees? No, not usually. The exception may be smaller loan sums.