Applying for a loan online should be one of the simplest things ever. Nevertheless, one or the other consumer misses in advance the information on how it works and what it is important to note. This is the only way to avoid possible irritation during the application process.

This guide shows what are the requirements to be able to apply for a loan online, what it needs, and how the whole process runs until it is disbursed.

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The first requirement, of course, is to find the provider within the scope of the credit comparison that comes closest to meeting your own expectations regarding interest and loan conditions. To bring the payday loan application online at https://www.paydayloanhelpers.com/ website, it is helpful to have a few things at hand. More about that right now.

Calculation

Banks are turning over their lending, interest rates are at historically low levels. It is therefore quite tempting to finance one or the other issue foreign. Against the background that saving is almost pointless, a good consideration.

Borrowers should, however, calculate in advance exactly how much credit they actually need in order not to exhaust their financial framework to the limit. An indication that the bank itself is careful that its customer does not take over, is the label “credit with responsibility” of the banking industry association. Banks using this logo have signed the Code of Responsible Lending.

Compare the annual percentage rate

The APR is the best way to compare, as it takes into account all the costs associated with the loan, but ATTENTION: If you wish to have residual debt insurance, the premium will be co-funded but will not appear in the annual percentage rate.

To find the cheapest provider, in this case, ask for two offers from the eligible banks. One without residual debt insurance, the second with residual debt insurance. This is the only way to tell which provider is the cheapest overall, as insurers calculate different premiums.

Requirements for a loan application

German law requires that loans can only be used by adults. This results in the first of several conditions:

• majority
• Place of residence in the Federal Republic of Germany
• Bank details with a bank based in Germany
• Employment outside the probationary period
• Regular income

Regular income includes salary, self-employment, pensions, capital income, and rent. 

Self-employed are often excluded

However, not all banks accept self-employed persons because they do not have the security of a salary assignment. If the loans are self-employed, they must have worked in their profession for at least three years and made a profit. For which banks, credit platforms, and credit intermediaries, self-employed persons can apply for a loan.

As part of the credit check, a Credit bureau query is automatically carried out. If the applicant refuses the Credit bureau information, the application can not be answered. Already when applying online, the banks ask numerous data. These include

• marital status
• Number of dependent children
• Number of persons living in the household
• Duration of employment
• The income of the applicant
• Total household net income
• liabilities
• Cost of living

The income of the applicant is not only important for the rate. It is also considered security. The simplest form of collateral is a salary assignment. Only with self-employed the banks resort to other collateral, for example, the car letter or the assignment of life insurance back.

It makes sense to have the statements from the last three months already available during the loan request in order to be able to answer questions about financial circumstances directly.

If the applicant has answered all questions for the online loan and sent the request, he will receive the offer and the actual loan application by e-mail within a few minutes.

It takes only a few minutes to complete the loan request.

The last step

Along with the offer and application, the applicant will also receive information on which documents must be submitted with the application. These are usually the bank statements of the last three months and the last three payslips.

The self-employed have to submit the last three tax bills as an alternative to the payroll. The borrower must sign the application and send it back to the bank. In the meantime, however, electronic options are also available. Which variant applies to the return of the documents, depends on the respective legitimization process.

Identity check

Banks are obliged to verify the identity of their customers by means of a corresponding identification document. For this, the customer needs either a valid identity card or a valid passport with residence confirmation. The driving license is not valid as a document of identification.

The different ways of testing

The classic identity check is made for an online loan as part of the PostIdent procedure. The check is carried out as part of the return of the loan application and the requested documents by an employee of Deutsche Post AG.

Alternatively, some institutes also resort to the VideoIdent procedure. The requirement for the applicant is either a mobile phone, a tablet or a PC with a camera and microphone. An employee of the bank checks the identity document as part of a video chat. The requisite documents for the bank can either be sent to the applicant by e-mail or sent to the institute by post. The signature on the smartphone or the tablet without a reader is also possible via the “sign-me” web platform.

If credit institutions offer different means of identity verification, it is up to the client to choose which option to choose.

Credit decision

After the bank has compared the economic details in the loan application with the documents and made a credit decision, the payment is made to the specified account. As a rule, if the borrower processes it promptly after receipt of the application, it will take five working days to credit. On the basis of the information provided by the applicant, the creditworthiness is determined and converted into an internal bank rating. Any loan collateral specified or required will be valued and the debt serviceability assessed. If the bank comes to a positive conclusion, a positive credit decision is made.

Credit application from the perspective of the bank (credit process)

In its study “Efficiency of credit processes”, the management consultancy and auditing firm Water Place CoM outlined the generic credit process for new and existing customer business with private and corporate clients:

The process of a credit application is divided from the bank’s perspective for new customers into the segments “Consulting and Sales”, “Application and Decision” and “Contract and Payment”. Once the customer is in inventory, it’s about inventory management, collateral management, ongoing credit rating, and workout management.

We can see that basically only the processes in the new customer business are affected by the customers. Nevertheless, the knowledge of the credit processes that run after a loan application has been approved by the bank is not unimportant. Especially the current credit rating can be of interest to customers, for example when it comes to rolling loans, framework loans or follow-on financing.

The client must be aware that a deterioration in the Bank’s credit rating may have a direct impact on future borrowing from the Bank, as well as on current loans, such as credit lines or bank overdrafts, which are also known as standby loans.