The Best Loans in Germany: Ultimate Guide

Compare the best options on the market and choose the one which best adapts to your day-to-day needs.

Further Below: Our Guide To Loans in Germany, covering everything you need to know.

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What Is a Loan?

At its core, a loan is a financial arrangement where a lender provides a specific amount of money to a borrower. This borrowed amount is expected to be repaid over a defined period, often with interest and fees. 

As in other countries, loans in Germany come in various types tailored to different needs and situations.

Different Types of Loans in Germany

Germany offers a diverse range of loans to cater to various financial needs. Here are some common types along with their local terms:

  • Personal Loan (Privatkredit): A personal loan is a versatile option designed to provide individuals with funds for a wide range of purposes, such as consolidating debts, financing a vacation, covering medical expenses, or managing unexpected financial challenges. 
    These loans are usually unsecured, meaning they don’t require collateral. The loan amount and terms depend on factors like credit score, income, and the lender’s policies.
  • Mortgage Loan (Hypothekendarlehen or Baufinanzierung): Mortgage loans are specifically tailored for real estate transactions, enabling individuals to purchase property or finance home construction. These loans are secured by the property itself, with the property acting as collateral. 
    Mortgage loans often have longer repayment periods, spanning several decades, and can be fixed-rate or variable-rate loans. The terms vary depending on the property’s value, the borrower’s creditworthiness, and prevailing interest rates.
  • Auto Loan (Autokredit): Auto loans are intended for purchasing vehicles, including cars, motorcycles, and other modes of transportation. 
    These loans often come with lower interest rates compared to unsecured personal loans because the vehicle serves as collateral. Borrowers can choose between fixed or variable interest rates and flexible repayment terms.
  • Student Loan (Studienkredit): Geared toward students pursuing higher education, student loans help cover tuition fees, living expenses, and educational materials. These loans usually offer flexible repayment terms, with the option to start repaying after completing studies. 
    Interest rates can be relatively lower than other loan types, and eligibility is often based on the student’s creditworthiness and academic progress.
  • Business Loan (Unternehmenskredit): Business loans cater to entrepreneurs and business owners seeking capital to start or expand their ventures. These loans come in various forms, including working capital loans, equipment financing, and business expansion loans. 
    Eligibility depends on factors such as the business’s financial health, creditworthiness, and the purpose of the loan.
  • Overdraft Facility (Überziehungskredit): An overdraft facility is a type of credit linked to a current account, allowing the account holder to withdraw more money than the account’s balance, up to a predetermined limit. 
    Overdrafts offer quick access to funds for short-term needs, but they often come with higher interest rates compared to other loans.
  • Credit Line (Kreditlinie): A credit line is a flexible borrowing option that provides access to a predefined credit limit. Borrowers can withdraw funds as needed and only pay interest on the amount used. 
    Credit lines are suitable for managing unexpected expenses or bridging temporary gaps in cash flow.
  • Credit Card Loans (Kreditkartenkredite): Credit card loans allow cardholders to borrow money up to their credit limit. While convenient, credit card loans usually come with higher interest rates compared to other loans, making them more suitable for short-term borrowing.
  • Building Loan (Bauspardarlehen): A building loan is a type of mortgage specifically aimed at financing property construction or renovation. 
    It involves a savings phase and a loan phase, where borrowers contribute to a savings account until a predetermined amount is reached, and then they can access the loan at favorable terms.
  • Microloans (Mikrokredite): Microloans are small loans provided by microfinance institutions to support individuals or small businesses with limited financial resources. 
    These loans are often used for entrepreneurship, income-generating activities, or essential needs in economically disadvantaged communities.

When Should I or Should Not Get a Loan?

SituationsWhen you would get a LoanWhen you should not get a Loan
Investment opportunities  ✔️ Financing a business venture or real estate investment.❌ Borrowing for speculative or high-risk investments.
Emergencies ✔️ Covering medical expenses or urgent home repairs.❌ Using loans for unnecessary expenses or frivolous purchases.
Education✔️ Pursuing higher education to enhance career prospects.❌ Taking out loans for non-essential courses or degrees.
Debt Consolidation ✔️ Combining high-interest debts into a lower-interest loan.❌ Consolidating debts without addressing underlying spending habits.
Home Purchase         ✔️ Buying a property to establish long-term stability.❌ Borrowing for a home that exceeds your budget.
Business Expansion ✔️ Expanding a business to tap into new markets.❌ Expanding without a clear and well-researched plan.
Car Purchase✔️ Buying a vehicle for essential transportation.❌ Acquiring a luxury car that strains your finances.
Medical Expenses ✔️ Covering necessary medical treatments or surgeries.❌ Borrowing for elective cosmetic procedures.
Home Improvements✔️ Enhancing the value and functionality of your property.❌ Taking out loans for non-essential cosmetic upgrades.
Job-Related Needs  ✔️ Relocating for a job opportunity that enhances your career.❌ Borrowing for job-related expenses without long-term benefits.

What to Look Out for When Picking a Loan in Germany?

Selecting the right loan involves more than just comparing interest rates. Consider factors such as:

  • Interest Rates and APR: Beyond the advertised interest rate, consider the Annual Percentage Rate (APR) that accounts for additional fees. 
  • Repayment Terms: Choose a loan term that matches your financial capabilities. While longer terms might reduce monthly payments, they could increase the overall cost due to accruing interest.
  • Fees and Charges: Be vigilant about any processing fees, prepayment penalties, or hidden charges. Understanding these costs helps you evaluate the true affordability of the loan.
  • Collateral Requirements: If applying for a secured loan, understand the collateral needed and the consequences of default. Collateral could include property, vehicles, or other valuable assets.
  • Lender Reputation: Research the lender’s history, customer reviews, and overall reputation. A trustworthy lender ensures transparency and a smooth borrowing experience. 
  • Debt-to-Income Ratio: Factor in your debt-to-income ratio (DTI), which compares your monthly debt payments to your income. A lower DTI suggests better affordability and repayment capacity.

How to Qualify for a Loan in Germany?

German lenders assess various factors before approving a loan such as:

  • Credit Score: A strong credit score greatly influences loan approval. German lenders typically consider the SCHUFA score, which ranges from 0 to 1000. 
    A higher score reflects better creditworthiness and increases your chances of securing a loan with favorable terms. Timely bill payments, low credit utilization, and a solid credit history contribute to a better score.
  • Income and Employment: Lenders assess your income stability to ensure you can meet repayment obligations. A steady job with a reliable income source improves your eligibility. Freelancers and self-employed individuals might need to provide additional documentation to prove consistent earnings.
  • Debt-to-income Ratio: Your debt-to-income ratio is crucial. You find this out by dividing your monthly debt payments by your monthly income. A lower ratio indicates your ability to manage more debt responsibly. Lenders generally prefer a ratio below 40-45%.
  • Residency Status: Non-residents might face stricter criteria due to the perceived risk associated with international borrowers. Being a permanent resident or having a long-term visa enhances your eligibility.
  • Collateral: For secured loans like mortgages, collateral provides security for the lender. The value of the collateral and its marketability affect your loan amount and terms. Assets such as real estate, vehicles, or other valuable possessions can serve as collateral.
  • Co-Signer or Guarantor: If your credit or financial situation isn’t strong, having a co-signer or guarantor (someone who promises to repay the loan if you can’t) can boost your chances of loan approval.

How Can Fundgecko Help You Get the Best Loan in Germany?

Fundgecko can play a pivotal role in helping individuals secure the best loan tailored to their specific needs. 

We offer a platform to compare various loan options from different lenders and select the most appropriate one for your needs. 

Fundgecko generates personalized loan recommendations that align with your unique situation, ensuring you’re presented with the most relevant options. 

Click here to get started with our Loanfinder!🔥

What Documents Should I Have Ready to Present?

Lenders typically require the following documents:

  • Proof of Identity: A valid passport or identification card is essential to verify your identity and citizenship status.
  • Proof of Income: Lenders require recent pay stubs, tax returns, or employment contracts to assess your earning capacity and repayment ability.
  • Bank Statements: Providing your recent bank statements showcases your financial stability, transaction history, and cash flow.
  • Residence Proof: Utility bills, rental agreements, or similar documents confirm your current address and stability, a crucial factor for loan approval.
  • Employment Details: Furnish information about your job, including job title, employer details, and duration of employment. This helps lenders gauge your job stability.

How Can I Improve My Chances of Getting a Loan in Germany?

Improving your chances of securing a loan in Germany requires proactive financial management and strategic planning. Here are essential steps to enhance your eligibility:

  • Maintain a Good Credit Score: Consistently pay bills and loans on time. Maintain lower credit card balances and steer clear of reaching your credit limits. 
    Make it a habit to frequently check your credit report for any mistakes and promptly deal with any inconsistencies you come across.
  • Show Stable Income: Stable employment with a reliable income source reassures lenders of your ability to meet repayment obligations. Demonstrating a consistent income history and growth potential bolsters your credibility.
  • Reduce Debt: Lowering existing debts, particularly high-interest credit card debt, improves your debt-to-income ratio. Lenders view a lower ratio favorably, indicating a healthier financial situation.
  • Offer Collateral: For secured loans, such as mortgages, providing valuable collateral boosts lender confidence. It reduces the perceived risk, making lenders more likely to approve your application.
  • Co-Signer or Guarantor: If your credit or financial standing is less than ideal, having a co-signer or guarantor with a strong credit history can enhance your eligibility. They take on shared responsibility for the loan, reducing the lender’s risk.
  • Open a German Bank Account: Establishing a local bank account demonstrates your commitment to the country and enhances your financial credibility. It also facilitates smooth loan transactions.
  • Proof of Residency: Having a stable residence and documented residency status, such as a long-term visa or permanent residency, improves your standing with lenders.

A Step-by-Step Guide on How to Get the Best Loan in Germany

Acquiring the best loan in Germany involves careful research, thorough preparation, and strategic decision-making. Below is a detailed step-by-step guide to assist you in effectively navigating through the process:

  1. Assess Your Needs: Clearly define your financial requirements. Determine the loan amount, purpose, and repayment capability. Different loans cater to distinct needs, so choose the one aligning with your goals.
  2. Check Your Credit: Obtain your credit report and score from a reputable credit agency like SCHUFA. Carefully go through the terms and conditions to prevent unexpected surprises.
  3. Research Lenders: Explore various lenders, including banks, online platforms, and credit unions. Compare interest rates, fees, and customer reviews to identify trustworthy options.
  4. Gather Documents: Compile essential documents such as proof of identity, income, employment details, and residence proof. Accurate documentation speeds up the application process.
  5. Apply: Submit loan applications to multiple lenders through a platform like Fundgecko. Applying to multiple lenders increases your chances of receiving competitive offers.
  6. Review Offers: Evaluate loan offers considering interest rates, repayment terms, and any additional fees. Calculate the total cost of the loan to make an informed decision.
  7. Choose Wisely: Select the loan offer that best suits your financial situation and requirements. Read the terms and conditions thoroughly to avoid any surprises.
  8. Complete Application: Provide any additional information or documentation required by the chosen lender. Ensure transparency and accuracy in your application.
  9. Approval and Disbursement: Await approval from the lender. Once approved, funds will be disbursed to your designated account. Review the terms one last time before proceeding.

Loan Cost Calculation Example for a Loan in Germany

Loan Details:
  • Loan Amount: €10,000
  • Annual Interest Rate: 6%
  • Loan Tenure: 3 years
  • 1. Monthly Interest Rate = Annual Interest Rate / 12 = 6% / 12 = 0.5%
  • 2. Total Number of Payments = Loan Tenure (in years) × 12 = 3 years × 12 = 36 months
  • 3. Equated Monthly Installment (EMI) = [P × r × (1 + r)^n] / [(1 + r)^n – 1]
    EMI = [€10,000 × 0.005 × (1 + 0.005)^36] / [(1 + 0.005)^36 – 1] ≈ €299.71
  • 4. Total Repayment = EMI × Total Number of Payments = €299.71 × 36 ≈ €10,790.56
  • 5. Total Interest Paid = Total Repayment – Loan Principal = €10,790.56 – €10,000 ≈ €790.56

In this example, for a €10,000 personal loan at 6% annual interest rate, repaid over 3 years through EMIs, the monthly payment would be approximately €299.71

The total amount repaid over the loan tenure would be around €10,790.56, with an interest cost of about €790.56.

Where to Get Loans in Germany?

When seeking loans in Germany, borrowers have a multitude of options available to them, ranging from traditional banks to online lenders, mortgage brokers, and credit card companies. 

Understanding where to find loans ensures you make informed choices that align with your financial needs and preferences. Let’s delve into the various avenues for securing loans in Germany:

1. Traditional Banks and Credit Unions

Traditional banks and credit unions are go-to sources for loans in Germany. Established financial institutions offer a wide range of loan types, from personal loans to mortgages. Their long-standing presence in the market provides borrowers with a sense of security and familiarity.

2. Online Lenders

In the digital age, online lending platforms have gained significant traction in Germany. These platforms offer a streamlined and convenient way to explore and compare loan options. Borrowers can access a multitude of lenders from the comfort of their homes, making the loan application process more accessible and efficient.

3. Peer-to-Peer (P2P) Lending Platforms

P2P lending platforms connect loan seekers directly with individual investors/lenders. These platforms offer an alternative to traditional lenders, potentially providing more flexible terms and faster funding.
Borrowers create profiles detailing their loan requirements and financial backgrounds, while investors evaluate these profiles to determine which loans to fund.

4. Mortgage Brokers

For individuals seeking mortgages, mortgage brokers serve as intermediaries between borrowers and lenders.  These professionals assess borrowers’ financial situations and connect them with suitable loan options from various lenders.

5. Credit Card Companies

Credit card companies also offer credit in the form of personal loans or credit card loans. These loans provide borrowers with quick access to funds up to their credit limits.

While credit card loans can be convenient for short-term needs, they often come with higher interest rates compared to other loan types, making them more suitable for emergencies or urgent expenses.

6. Specialized Financial Institutions

Certain financial institutions in Germany specialize in specific types of loans. For example, there are housing finance institutions that specifically deal with mortgages. 

These specialized lenders might offer unique benefits and expertise for particular loan types, catering to borrowers with specific needs.

7. Building Societies

Building societies are unique to Germany and offer a mix of savings and loan products. They involve a two-phase process: savings and lending. 

During the savings phase, borrowers contribute to a savings plan, and in the lending phase, they can access a loan at favorable terms. Building societies are particularly popular for home construction or renovation projects.

8. Government Programs and Grants

In Germany, various government programs and grants are designed to support specific industries, education, and innovation. 

These programs can include low-interest loans, grants, and subsidies to encourage economic growth and innovation.

9. Credit Unions

Credit unions in Germany operate on a cooperative model, where members are also owners. They offer a variety of financial services, including loans, often with competitive interest rates. 

Credit unions focus on building strong relationships with their members and providing personalized financial solutions.


Getting the best loan in Germany isn’t too complex when you understand the different types of loans out there and what you need to qualify. Whether you’re after funds for personal stuff, business plans, or education, the right loan can be a big help.

Keep an eye on things like interest rates, when you have to pay back, and any extra fees. And don’t forget, having good financial habits can make it easier to get the best loan deals.

Just like finding your way through a new city, finding the right loan might need a bit of exploring. Stick to these ideas, and you can confidently get a loan that’s not just useful, but also sets you up for a brighter financial future.

What is a good SCHUFA score?

A Schufa rating is represented as a percentage, with 100 reflecting the best and 0 the worst, on a scale of 0 to 100.

Everyone starts with a score of 100, which qualifies as “perfect,” but points can be taken away for things like missed or delayed payments, declined credit applications, or protracted overdraft periods.

Many lenders will view you in the following ways based on your credit score.

97.5% or higher: quite low risk

95% – 97.5%: minimal or negligible risk

90% – 95%: enough for higher risk

80% – 90%: risen to a high risk level

50% – 80%: Very high risk

50% and below: Critical risk

In a competitive rental market, landlords may consider you as a little riskier candidate and favor someone with a better financial history if your score is 95 or lower.

Frequently Asked Questions

Yes, it’s possible, but a higher credit score improves your chances of approval and better terms. 

Some lenders offer loans specifically for individuals with lower credit scores based on SCHUFA, but these might come with higher interest rates. Consider building your credit before applying for a loan to increase your eligibility for better options.

Loan approval times vary. Online lenders and peer-to-peer platforms might offer quicker approvals, often within a few days. 

Traditional banks might take longer due to comprehensive application processes. Ensuring you have all necessary documents ready can expedite the process. 

Yes, non-residents and expats can get loans in Germany, but they might face stricter requirements. 

Being a permanent resident or having a long-term visa improves your eligibility. Having a stable income source and a strong credit history in Germany also enhance your chances.

Yes, some loans in Germany might have prepayment penalties, especially for fixed-term loans. These penalties are meant to compensate lenders for the interest they would lose due to early repayment.

 Always review the terms of your loan to understand any potential prepayment fees.

A fixed-rate loan in Germany has an interest rate that remains constant throughout the loan term, offering predictable monthly payments. 

A variable-rate loan, also known as a floating-rate loan, has an interest rate that can change periodically based on market conditions, leading to potential fluctuations in your monthly payments. Choose the option that aligns with your risk tolerance and financial situation.

Glossary for Germany loan terminology

German TermEnglish translation
Allgemeine BedingungenGeneral terms and conditions
Antragsgebühr, ErwerbsgebührApplication fee: the fee charged by a lender to cover costs associated with processing the loan
Anzahl der Kinder mit Anspruch auf KindergeldNumber of children entitled to child benefits
ArbeitslosigkeitUnemployment, job loss
ArbeitsunfähigkeitSick leave, disability
Art des WohnsitzesResidence type
Auskunftei, SCHUFACredit agency, In Germany, your creditworthiness is most likely tracked and recorded by Schufa Holding AG, Germany’s biggest credit agency
Automatische Zahlung von RechnungenAutomatic bill payment
BankverbindungBank account, bank details
Berufliche BeziehungProfessional relationship
Bewerten SieRate
BürgeA guarantor is someone who promises to make sure you repay the loan completely. Lenders ask for guarantors when your credit history isn’t good enough. If this happens, the guarantor is legally responsible for paying back the loan
DauerDuration of employment
DuraciónTenure of the loan
Einzulösende Verpflichtungen DritterThird-party obligations to be redeemed
Erste Tranche zahlbar amFirst installment payable on
Fester SollzinssatzFixed debit rate
Gesichertes DarlehenSecured loan
Gewünschte FristLife/period of a loan
Gewünschtes DarlehenLoan desired
Höhe des DarlehensbetragsLoan amount
Jährlicher effektiver ZinssatzEffective annual interest rate
Kleines DarlehenSmall loan
KreditantragBorrowing request
KreditlinieLine of credit, official document that shows the rules for a personal loan
KreditratenLoan rates
KreditwürdigkeitCredit history, financial standing
Lombardkredit, Garantien, SicherheitenLombard loan, guarantees, collateral(asset that backs your loan)
NettoeinkommenNet income
Nichtbezahlung, ZahlungsverzugNon-payment, delinquency
Nichtzahlung, Zahlungsverzug, VerzugszinsenNon-payment, late payment, interest on arrears
Option DeckungOption on Payment protection/ insurance
Persönliche DatenPersonal data
Persönliches Darlehen, Ungesichertes DarlehenPersonal Loan, unsecured loan
Professionelle DatenProfessional Data
RatenschutzversicherungPayment protection insurance
SicherheitskautionSecurity Deposit
SolvenzSolvency, a credit score is an individual’s valuation and ability to repay a loan
System der sozialen SicherheitSocial security system
Tod, Unfall, Arbeitsunfähigkeit, Arbeitslosigkeit (Wartezeit von 3 Monaten (außer Tod durch Unfall))Death, accident, incapacity for work, unemployment (waiting period of 3 months (except death due to accident))
ÜberziehungsrahmenOverdraft facility
UmschuldungRescheduling of debt
Unterzeichneter VertragSigned contract
Variable ZinsenVariable interest rate
Verpflichtung zur Vorlage von NachweisenObligation to provide evidence
Zahlung in RatenPayment in installments
ZinssatzInterest rate

About this page, our methodology

What this page is for: Our goal is to help you get the best financing for your needs. Therefore, here we explain you what credits with payday guarantee are, how you can compare them to know which one suits you and which offers are the most attractive right now.

Source: the information regarding the main characteristics of payday loans and their current regulation comes from Law 16/2011 on consumer credit contracts among other reference portals.

Methodology: the data relating to the conditions of these products (amount, term, interest, etc.) have been obtained through online research and consultation of the official statistics of the aforementioned reference sources.

About Fungecko: We are an online comparison site specialized in personal finance and home economics products. Here you can, in addition to comparing the conditions of all offers, find quality information that will help you identify the payday loans that best suit your needs.

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