The flexible loan represents a special type of borrowing transaction and thus a special type of loan. We differentiate between the current account credit and the repayment credit.
For current account credit:
- Special feature of this type of loan or loan:
- For disposition credit:
- The flexible loan – a good solution
- Who is the right lender?
- Who awards a suitable loan?
For current account credit:
A loan or lender tells a borrower to borrow a certain loan amount (eg: 100,000 euros) over a fixed term (eg 1 year). The borrower agrees to pay interest on the loan and repay it on time.
Special feature of this type of loan or loan:
The lender provides the 100,000 euros on time – and the borrower can retrieve this agreed amount, but he does not have it. If his credit needs currently only 20,000 euros , he calls only 20,000 euros. He therefore has an open credit line of 80,000 euros.
The borrower only has to pay the borrower 20,000 euros. For the unused 80,000 euros he has to pay a provisioning fee. But this is much lower than the actual interest rate.
The objective of the borrowers is to have a liquidity buffer available . Secured by this liquidity buffer, they can react quickly and compensate for payment defaults. The incoming sales proceeds reduce the interest burden and at the same time increase the potential credit line.
The current account credit is used by merchants and traders. He meets their need for financial flexibility and security, with manageable financing costs .
Good to know:
A current account credit can be prolonged (extended) in consultation with the lender. The respective loan amount can be adjusted to the course of business and the respective financing requirements .
There is no provision for the loan to be secured, however, the lender will require insights into business histories, information about the overall financial situation and business prospects. For private individuals, this type of loan is rather unusual . Here we find the disposition credit.
For disposition credit:
Account holders with a regular cash income are often offered a discretionary credit by their account-holding bank. This type of loan is colloquially referred to as Dispo .
For the bank client and potential borrower, the offer submitted by the bank is not binding. He can have a disposition granted, but as long as he does not overdraw his account, the credit offer of the bank remains a unilateral declaration of will the legally necessary assumption is missing .
Only when the account holder covers his bank account and thus uses the MRP credit, a loan agreement is created and the borrower is obliged to pay the agreed interest rates. If the borrower repays the interim loan, the loan agreement expires .
A provision fee does not occur. The bank customer can negotiate with the bank about the amount of the disposition credit granted. A real credit protection is not provided for this type of loan because it is a pure personal loan.
In addition to the continuous receipt of money play here the personal impression and the reputation of the person a paramount role. A rule of thumb is that the dispo can be two to three times the monthly cash receipts . With a monthly cash receipt of 5,000 euros, a potential Dispo in the amount of 10,000 euros to 15,000 euros is possible.
Interest on overdraft facilities is relatively high. Therefore, a long-term financing an installment loan is always the better solution .
The flexible loan – a good solution
In modern times, it has not become a rarity to have to take out a loan. A drama does not represent this fact, however, especially since a wide range of lenders are available. If the creditworthiness is still in order, or not burdened too much and the debts still to save, the possibility of each person is available quickly and without further problems .
A flexible loan is a good way of borrowing finances. He is as versatile as life itself and adaptable to different situations. He is praised in great form by modern banking houses and has the greatest success rate when it comes to a repayment.
If a customer can rely on the promise of a bank, it is possible that he can be quickly disappointed, especially since nice words are spoken quickly. The employees are psychologically trained, so a customer can fall for a fix. Every employee just does his job, and so every customer should be aware of that before signing a contract . It is particularly important to take care of all agreements in a contract, so that it can be followed subsequently.
With a flexible loan, the contract terms are looser than others. The borrower is free to take a payment break, provided that it has to be agreed in writing. For other contracts, this action is not possible and can be very expensive. In that case, the lender could charge a fee for that, which could be excessively high.
Who is the right lender?
For reputable lenders, it is possible to take loans with flexible repayment. As a borrower one should inquire exactly and value written agreements. A verbal contract may count, but in case of dispute it is difficult to prove , unless it was recorded with a phonogram or recording device.
Good to know:
A loan with a flexible repayment can recognize the customer in the credit agreement. Of particular note is the fine print. This contains all the information about the flexible form of credit. There it is obligatory to mention this and to name the possibly incurred costs in detail.
Who awards a suitable loan?
Normally, the customer can turn to any bank of his trust. Modern banking houses are designed to provide flexible loans. Such a loan depends on what the borrower has for exact ideas and what this financial flexibility is worth to him. In itself, the banks put up a certain overhead cost, because it is finally a special request and the companies want to earn.
Care must be taken that a flexible repayment of a loan does not bind the borrower. There are various special repayments, which can be credited to the main amount . For pauses of the payment is a certain debt restructuring. If you are so satisfied with a loan, you do not have to make unnecessary changes or steps in between.
To mention is the case that the customer must always remember that he himself must pay back the loan and not the bank. The clerks may be very friendly and likable, but it is for their job and not because they like the borrower so much.