Almost everyone has a checking account and with them a overdraft facility. The overdraft facility – or overdraft facility – is provided by banks to their solvent customers. If the regular receipt of money is accordingly, the bank will already provide up to three net monthly salaries. The customer can freely use it. However, the customer should use the overdraft facility carefully, because if he is always used without returning anything, this can result in a negative entry in the Credit bureau. A loan despite a minus in the account is the better solution.
The credit despite a minus in the account – the outlook
Many customers who always use their overdraft facility often ask themselves that the overdrawn checking account can sometimes lead to a loan refusal. The customer should know if the overdraft facility is exceeded beyond the granted credit line and this always happens, the bank will inform Credit bureau of this. Of course, this can result in a loan rejection. The overdraft facility of the loan that provides the customer with money that he actually doesn’t have can become a debt trap.
At the latest when the bank no longer carries out transfers or these are returned as direct debits or when the incoming salary no longer covers the overdraft facility, the customer must act. If he does not do this, the bank can terminate the overdraft facility and the customer must repay the outstanding amount in one. He shouldn’t let it get that far. If he no longer has an overview of his account, a loan should be applied for despite the minus in the account.
If the customer wants to apply for a new loan now, he can include the overdraft facility in the contract. Generally, an overdrafted checking account is no reason to refuse a loan. There is also to be taken into account that the customer does not necessarily have to take out the loan at the bank where the debit is conducted, despite the minus in the account. That is mostly at the house bank. However, these banks have worse conditions, such as the direct banks on the Internet.
A good preparation for the loan despite a minus in the account is to reduce the overdraft facility. This can be done by not withdrawing the full amount received every month, but by leaving a manageable amount. This increases the chances of getting a loan.
The dispo trap
It is the house banks that take a quick look at your customer’s account movements before granting a loan. If he sees the permanent overdraft facility there, it could even happen that a co-applicant for the loan becomes necessary despite the minus on the account. Especially when the overdraft has left a negative entry in Credit bureau.
Those who always use their overdraft facility also know that the bank’s interest charges are added to the overdraft facility every three months, i.e. every quarter. Since the interest level is very high anyway, it is in the double-digit range, often even 15%, a loan should definitely be applied for despite the minus on the account. The overdraft facility is included in the loan agreement and the account is clean again.
If you calculate an average income of 2,000 USD, the interest rate of 14.75% is 221.25 USD per quarter. A comparable installment loan is available for 4.75%, which means a charge of 71.25 USD. You can already see how a disposition can increase. That is about 1,000 USD in interest charges in one year. It is therefore not surprising that the customer can fall into a debt trap if the overdraft facility is not paid up. If the loan is approved despite a minus on the account, the overdraft facility should be reduced or removed entirely. The customer should then plan his finances better and save himself a small financial cushion so that he no longer needs the overdraft facility.
The creditworthiness of the customer shows whether a loan is approved. If the income is sufficiently high, the Credit bureau is clean and there is a permanent position, there is nothing standing in the way of a loan despite a minus in the account. The customer should then take on all of his liabilities with the loan and only pay one loan. This gives him a better overview of his finances. That would be a debt restructuring that many banks also offer. Debt restructuring could also expand the customer’s financial scope.
The bad credit rating
But there are also customers whose creditworthiness has already suffered from a negative entry. The loan request from conventional banks is often unsuccessful. For this clientele there are credit agencies that can provide a Credit bureau-free loan for their customers. The funds come from abroad and have to be returned regularly and on time. These banks have no pardon and will execute a garnishment in the event of payment irregularities. Nobody really wants to expose himself to that.
The banks have strict requirements. Here, too, the income must be sufficiently high and show an attachable share. The Credit bureau is waived, and the loan is not entered despite the minus in the account. A attachable share of around 80.00 USD is shown if a single person has a net income of 1,160 USD. A permanent job is required, the employment contract may not be limited and may not include a trial period.
Foreign banks generally only grant small loans. On the one hand, 3,500 USD and, depending on the creditworthiness, 5,000 USD. Those who need more money have to provide collateral. This can be a second applicant or a guarantor. Real estate or other valuable collateral is also accepted. But the extent to which a guarantee is recognized by German banks under German law would have to be asked.
The terms of both loans are 40 months. The rate for the 3,500 USD loan is around 105.00 USD, for the 5,000 USD loan 150.00 USD is estimated.