Borrowing money or lending money, lending, is the driving force of the economy. Without credit, there would be insufficient demand, without demand, production would fall – without credit, the economy would be in a downward spiral. The idea that credit is a symptom of the modern market economy is not entirely true.
Even in the former DRG, citizens were able to obtain a loan by marriage, purchase of property and economic necessity. However, classical consumer credit was not on the list.
Lending and lending money – not quite as old as humanity
The oldest bank in the world, was founded in 1472. However, there were already loans before. Strictly speaking, the first traces of credit were found in Mesopotamia dating back to 3000 BC. At that time, cereal seeds were lent to farmers, who then had to repay the grain plus interest. So loans have been with us for around 5,000 years.
Throughout history, people have gotten away from bartering and invented the money as a universal substitute. Then as now it was important to compare the terms to which you lend something. You can calculate the current conditions for payday loans quickly and easily with our loan calculator.
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The credit landscape has changed
Twenty years ago, there were basically only two options for borrowing money. Either the way led to the house bank or the borrower gave in a newspaper an advertisement on “search 5,000 DM of private”.
The way to the house bank is today in most cases only the second best solution. Credit comparison portals show the cheapest providers. A loan is today a commodity like any other, which must be sold by the offerer. The embarrassing credit conversation, because the borrower has a financial shortage, is a thing of the past.
Special portals, which mediate loans from private to private, are gaining more and more importance. This is not just because borrowers have no chance of getting a loan because of weak Credit bureau at the bank. Many consumers just want to borrow money from the banking system. The reputation of banks has suffered greatly in recent years.
Incidentally, the same applies to corporate financing. More and more companies are using the so-called P2P loans (peer-to-peer lending, in German: target group to target group). Especially when it comes to innovative business ideas, the banks prefer to backfire rather than approach the customers. The chance of receiving money through a P2P platform is many times higher in this case.
Bank lending today follows a rigid pattern. If there used to be a classic credit discussion, the credit check today is based on an industrialized credit process, which is purely computer-based.
In order to keep this process as streamlined as possible, and thus the costs for the banks, the institutes usually dispense with classical collateral for installment loans and limit themselves to the loan assignment of the borrower. This eliminates the costly staff costs of collateral.
Self-employed people suffer from this approach because they can not offer a salary assignment. Only very few banks are eligible for this target group.
Loans from private
Private loans are gaining more and more popularity. Here, however, a distinction must be made between the classic loan from private, friend lends friend money, and the mediation portals.
Numerous platforms specialize in bringing together potential financiers, investors, and credit seekers. For the lenders, payday loans are an interesting form of investment.
The interest rates are significantly higher than those of the classic capital market. On the other hand, the investment is not subject to price fluctuations on the stock market. Usually, not a financier finances a loan, but participates with a small tranche. This in turn leads to a risk diversification that brings more security into the loan portfolio.
Advantages of the platforms
For borrowers, these platforms offer several benefits. Anyone who has a weak Credit bureau and falls through the electronic grid at a bank, here has quite a chance to get a loan. This also applies to self-employed persons who can not offer a salary assignment.
Banks also require minimum volumes that are not suitable for anyone who needs a loan. Smaller amounts can also be financed on the platforms.
The prerequisite is that he presents his project to be financed and himself as comprehensively as possible and makes his request as transparent as possible. A request is impossible only with hard criteria such as arrest warrant or insolvency.
However, it is a fallacy that only consumers with poor credit ratings ask for credit. More and more people who would be greeted by the banks with a kissing hand as a borrower, prefer these platforms before the banks.
The bank’s loss of public reputation, which has already been mentioned, ensures that more and more consumers want to take out loans or invest money in the “banking system”. The reason for this is the lack of transparency of the financial institutions, accompanied by discussions about incorrect advice and not least the recent increasing court proceedings for poor documentation of contracts. The topic “right of withdrawal because of wrong cancellation policy” was finalized only a few weeks ago.
The interest on payday loans for platforms
The interest on loans between only two parties is an individual matter. The same applies to the credit platforms as to classic bank loans.
The borrowers are divided into different credit ratings. The interest rate then depends on the corresponding classification. For investors, this classification means that they can get an idea of the potential credit default risk. At the same time, they have the opportunity to put together a loan portfolio with a wide variety of maturities and yields.
The risk of interest-free loans
Within families or among friends, it is quite possible that loans are given without interest. However, this is a huge tax trap, as the Focus wrote in 2012. If the loan runs for more than a year, the Treasury assumes that this is a donation. Depending on the degree of relationship then falls to a gift tax, which is quite extensive.
The credit agreement
If a private loan is made between two private individuals, it makes sense to set up a loan agreement. With money, the friendship is known to stop in many cases.
It does not always make sense to set up a loan agreement, not only with regard to the risk of gift tax.
Borrow money without Credit bureau?
There are many reasons why consumers want to borrow money without a Credit bureau request or a Credit bureau entry. The safest options are a loan from the family or a real loan without Credit bureau.
Of course, a negative Credit bureau can be the reason for such a loan. However, some consumers also plan a larger investment at a later date and do not want it to be adversely affected by a small loan.