Personal Loans in Germany

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 Personal Loans in Germany, Everything you need to know.

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Personal Loans in Germany, All You Need To Know:

Compare the best personal loans online for free and in just 5 minutes. At FUNDGECKO we show you the small print of all the loans on the market, we explain what you should know before using them and how to get the best offer.

Also read: The Best Loans in Germany

The term personal loan is misleading because it is a term for two fundamentally different types of loans. On the one hand, banks and credit institutions advertise with the term personal loan and use it to describe a consumer loan that they grant to private individuals.

This can be, for example, a classic instalment loan, an instant loan or a short-term loan.

The only important thing here is to distinguish it from a business loan or corporate loan, which is granted to entrepreneurs, tradespeople or self-employed persons in order to invest in their own business with borrowed capital.

The narrower meaning of the term personal loan or private loan, however, refers to a loan from private individuals.

The special feature is that these are natural persons who act as private lenders, and there is no commercial lender behind them, such as a bank or credit institution.

In the case of a private loan, therefore, there is no commercial intention, which is clearly present in the case of banks and credit institutions whenever they grant a loan, nor is there the in-depth advice that you sometimes receive at a bank.

However, the commercial aspect should not be confused with the intention to make a profit by lending. The transition between a loan from private individuals and commercial lending is rather fluid because even a private individual who grants private loans can be classified as acting commercially if, for example, several private loans are granted, even if this is done without interest.

The basis for this assessment is, among other things, a ruling by the Federal Fiscal Court from April 2012, which, based on the Value Added Tax Act and the Commercial Code, does not determine commercial activity by the intention to make a profit, but by many other factors, such as participation in the financial market, the duration, and intensity of the granting of loans and the planned activity.

The term personal loan is therefore indeed sometimes misleading and misleading and can refer to different types of loans. This guide will tell you everything you need to know about the different types of personal loans, whether you want to borrow money from a private source or are looking for a personal loan calculator for a loan from a commercial provider.

Definition and characteristics of personal loans

Did you know that the terms personal loan and credit from private sources are often used synonymously? However, the two terms mean something quite different. A personal loan is a loan granted to private individuals. This distinguishes it from a business loan. Often a consumer loan is meant.

A private loan, on the other hand, is a loan from a private person. This can be a promissory note loan from an acquaintance or relative. In this case, you borrow money directly from a private person. Such loans are often interest-free.

Meanwhile, there are professional intermediaries for private loans such as auxmoney and Smava. Here, private individuals or companies can post a loan request. Lenders invest in a project of their choice. Derived from the English term peer to peer, these loans are also called p2p loans.

Requirements for a personal loan

Personal loansAs with most other types of credit, the following requirements apply to the granting of a personal loan from a German credit institution:

• Minimum age 18 years
• Residence in Germany
• Sufficient income
• No over-indebtedness
• Current account for disbursement

Depending on the lender, further requirements may be demanded. Many, but not all, banks also require

• A positive SCHUFA report
• Income from pension, retirement, or permanent employment.

Some banks, such as Targobank, offer personal loans for the self-employed, such as tradespeople and freelancers. With other banks, this clientele needs either a second borrower with a fixed income or additional collateral.

On platforms for private loans from private individuals such as Auxmoney, the hurdles are less high. To be able to publish a loan request there, the following criteria must be met:

• Minimum age 18
• Residence in Germany
• German bank account
• Repayment must be realistic

At personal loan platforms like Auxmoney, people can get a personal loan who have been rejected by banks as borrowers. However, platforms like Auxmoney do not grant loans in the following cases:

• In case of insolvency
• In the case of outstanding titled debts
• In the case of an arrest warrant
• If the credit rating is too low

Most p2p lenders require a SCHUFA report. Applicants with below-average creditworthiness must expect higher interest rates, and interested parties with very poor scores will be rejected.

Distribution and market shares in the granting of personal loans

There is a wide range of statistics relating to private financing by banks and credit institutions. An evaluation from 2018 published on the internet portal Statista.de examines the market shares in the lending business with private individuals in Germany by bank group.

In the process, almost one trillion euros was disbursed to dependent private individuals in the aforementioned year. 38 per cent of this was granted by real estate credit institutions. These are predominantly banks that specialise in granting real estate loans. Their high market share is not surprising, because real estate loans usually have a very high volume.

The savings banks, as the second most important lenders, lend almost every third euro to private individuals. This group also includes 1822direkt from our loan comparison, a sales subsidiary of Frankfurter Sparkasse.

The third most important lender, with around 25 percent, are the credit cooperatives, which primarily include the Volks- and Raiffeisenbanken, but also many other cooperative banks such as the Sparda Banken.

Large banks account for about 11 percent of this segment of the lending business, the other private banks (including regional banks and branches of foreign banks) for about 23 percent. Also important lenders are state banks and banks with special tasks. The latter include, for example, the KfW. Loans from building societies were not included in the evaluation.

Find suitable offers in the personal loan comparison

The personal loan as a consumer loan from a bank or credit institution can be applied for at practically all credit institutions active on the personal loan market due to its very loose restriction. However, there are many differences in interest rates between lenders. Therefore, it always helps to first carry out a suitable credit comparison before applying for a personal loan. You can use the comparison calculator on Fundgecko for this. Banks and credit institutions that grant consumer loans to private individuals and whose offers are compared in the comparison calculator are, for example:

• SWK Bank
• Barclaycard
• Creditplus
• Norisbank
• Targobank
• DKB
• Santander
• SKG
• ING

All of the lenders mentioned are considered reputable, transparent and professional and enjoy an excellent reputation throughout Germany. To use the loan calculator, you only need to complete a few steps.

First enter the desired loan amount and then the preferred loan term into the credit tool. If necessary, you can then determine the purpose of the loan before you start the personal loan comparison. After you have used the loan calculator, you will receive all offers that most closely match your entries.

These offers are already listed for your benefit – with the most favourable lenders first. After you have found the most suitable lender, you can submit the pre-application and wait for the official loan agreement. After this has been sent back to the lender, the disbursement usually takes place within two weeks.

Getting a personal loan in Germany: Step-by-step

Enter loan amount and term

You can easily find the best personal loan with our personal loan comparison. Enter the desired loan amount and term in the field at the top of this page. The loan amount depends on your wishes. If the exact amount is not yet fixed, it makes sense to choose a loan amount that is five to ten percent higher. For example, if a cost estimate for the renovation of the bathroom calculates costs of 10,000 euros, you should enter a loan amount of 11,000 euros. You can pay back too much money later.

The following applies to the term: The faster the loan is repaid, the less interest accrues. However, the monthly instalment must not be so high that the money is no longer sufficient at the end of the month and you have to take out an overdraft facility. The overdraft facility is considerably more expensive than a personal loan. Finally, you will be asked about the purpose of the loan. This is important for some loans, for example if you want to finance a car with the money. In this case, the fees are often lower. If you do not want to give any details, leave the “free use” option set.

Make a preliminary selection
The comparison calculator for personal loans will search for the most favourable results after you have made your entries. The most favourable interest rate is used as a selection criterion. However, this is not the most favourable option for every applicant individually. Some very favourable offers only apply to people with a very good credit rating.

It is therefore worth taking a look at the 2/3 interest rate or choosing a loan that is not dependent on creditworthiness. The loans from large direct banks like DKB or ING are usually a little lower in the comparison, but all customers receive the interest rate shown, regardless of creditworthiness.

At the end of the application process, the individual interest rate for the selected bank and some competitors is displayed. In this step, you can switch again without any disadvantages.

Submitting an application

Once an offer has been selected, the actual application process is started by clicking on Continue. Now you have to provide information about your place of residence, family situation, income, regular expenses and other liabilities. This takes some time, but it is important. Only in this way can the lender assess the creditworthiness and make an individual offer.

At the end of the selection process, the customer is shown a concrete interest rate. The Fundgecko personal loan comparison also calculates it for other banks. Now the selection can still be changed. If another bank is more favourable and offers similarly good conditions, download its loan application.

The application usually has to be signed and returned; some providers now offer a fully digital personal loan.

Wait for a credit check

After submitting the application, the identity must be confirmed. This usually works via a VideoIdent procedure. This requires a webcam and an identity card.

If you don’t have an online camera or don’t want to use the procedure, you can usually prove your identity at a post office. An identity card is also required for this.

Now the credit check must be waited for. The creditworthiness was already checked a first time during the application process. For this purpose, the lender uses the data entered as well as information from the credit agency SCHUFA. You have to give your consent for this. The credit agency has stored data on loans and current obligations, for example mobile phone contracts. It records whether payments have been made on time. In simple terms, it uses this to calculate the risk of default by examining how the data has affected repayments in the past.

After the credit agreement has been sent in, all the information is checked again by the bank. As a rule, the contract is concluded at the conditions shown in the comparison calculator. Only in exceptional cases is the credit decision withdrawn.

Nevertheless, it still takes a few days until the money is in the account. Hardly any bank needs longer than a week for the credit check, the credit decision and the disbursement.

Personal loans from banks are available for these purposes

The Fundgecko credit comparison offers ten different purposes to choose from:

• Free use
• New/used car
• Debt refinancing
• Holiday/travel
• Renovation
• Furnishings/Furniture
• Electrical appliances
• Current account balance
• Real estate
• Relocation

The default setting is free use. In principle, the purpose of a personal loan is not predefined. The lender usually does not check whether the reasons given in the Fundgecko credit comparison are met. Car loans are an exception. Here, the vehicle serves as collateral, and often the vehicle registration document (Part II of the registration certificate) must be deposited with the lender.

If you want to invest in a property, for example in a renovation, you should consider a construction loan. This is cheaper, but there is often a minimum sum of 50,000 euros or more.

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 personal 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 personal loans and their current regulation comes from recent law 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 FUNDGECKO: we are an online comparator 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 personal loans that best suit your needs.

Note: the services we offer are totally free for the user, as FUNDGECKO obtains its income from advertising and its featured products.