Purchase loan is another term for a consumer loan. It is suitable for cases in which the borrower actually plans to use the borrowed money to finance a long-term purchase. The purchase loan therefore differs in its use from a loan to balance the current account, but also from a vacation loan that is used to finance a vacation trip. In addition to banks, retailers can also be considered as lenders if they make a partial payment agreement directly with their customers.
Two methods are conceivable when agreeing a purchase loan at the place of purchase. On the one hand, the retailer can independently coordinate the financing of the purchase with the customer by making a partial payment. The other option is for the seller to broker credit to a cooperating commercial bank.
In both cases, when financing a purchase from the dealer, it is common for the processing to be carried out in a simplified manner up to a specified amount. As a rule, no proof of salary is required when borrowing at the place of purchase. Instead, the ID card and a bank card or credit card are sufficient as proof of credit.
Another advantage of the purchase loan taken out directly in the business is that the interest is often cheap. Even an interest-free installment is largely common in some industries. However, in addition to the financing costs, the buyer should also compare the goods prices before concluding the hire purchase contract. It is not uncommon for a competitor without their own financing offer to sell the same products at significantly lower prices.
A purchase loan through a commercial bank is an installment loan. This is traditionally given without a purpose limitation, so that the financial institution does not know whether the customer is actually using the loan to finance an acquisition or for other purposes such as a vacation trip. An exception are car loans, where the vehicle purchase must be proven.
At the same time, borrowing for the purchase of a motor vehicle is linked to the transfer of the registration certificate Part II to the bank, so that there is no security with ordinary installment loans. For some years now, banks have increasingly been offering special offers to finance certain purchases, the borrower’s use of which must prove that the funds have been used.
Depending on the bank, this is a purchase loan for furniture or one for a high-quality bike. The product names furniture loan or bicycle loan are often used. Purpose-linked acquisition loans are almost always cheaper than the traditional installment loan from the same bank that has not been used. The prospective borrower uses a credit comparison to check whether they are also cheaper than consumer loans without earmarking other banks.
The basic requirement for the granting of a purchase loan is that the borrower can pay the monthly installments from his disposable income. The bank checks this against a household bill. If the borrower chooses a longer term for a purchase loan, the loan installments to be paid each month are reduced, making it more likely that the loan application will be successful even with a low income.
At the same time, consumer advocates recommend adjusting the term of a purchase loan to the probable period of use of the financed item.
Average usage times can be specified for technical devices, after which they are either irreparably defective or cause extremely high repair costs. In the case of other purchases such as furniture, on the other hand, lifestyle habits determine which maximum loan term is appropriate. If households change their living room furnishings every four years, they choose a maximum of this term for the purchase loan used to pay them.
On the other hand, anyone who uses furniture until it is finally worn out can, with a clear conscience, opt for the maximum seven years offered by many banks as the repayment period for their purchase loan.
To get a purchase loan someone has to have a good credit rating. The creditworthiness reflects the payment behavior of every person. If, for example, invoices and loans are not serviced, the person gets a bad credit rating. But other factors also play a crucial role. For example, if someone is always in the negative with their checking account or if someone moves often, their credit rating also deteriorates. Also, not everything should be bought on credit, as this also worsens the credit rating.
The advantage of a good credit rating is that you have to pay less interest. All of this data is stored at Credit bureau AG. Its shareholders are mainly banks. The aim of these is to protect yourself from default on the loan wherever possible.
If this is not taken into account and several loans are not paid, this can threaten the existence of the entire financial system. See financial crisis in 2008. Many loans were distributed here in the United States, although it was already apparent that there would be problems here.
If you want to take out a purchase loan without Credit bureau noticing anything, there are several ways to do this. There are private credit platforms on the Internet. The borrower can present his project here and the lenders can decide whether to give their money. However, it must be ensured that everything is clearly described, because private lenders also want their money back.
It is important with these platforms that the borrower has as regular an income as possible. Collateral is also important. In the unlikely event that the loan cannot be serviced, the collateral is still available.
Foreign banks offer another possibility. They also have no access to Credit bureau and cannot provide data to them. It is also important that the borrower has regular income.
Collateral is also important. This can be, for example, a car or other valuables. However, it must be expected that these will take higher interest rates than the conventional banks, as they are more likely to default.
Probably the easiest way to get a purchase loan is to ask your relatives and friends. In most cases, interest does not even have to be paid here because the lenders have a closer relationship with the borrower. Another advantage is that the loan is not listed anywhere and therefore Credit bureau is not aware of anything.
Nevertheless, a credit agreement should be concluded by both parties here. Should there be a dispute anyway, both parties are on the safe side and do not have to worry about their money. This contract also existed in court.
But which purchase loan should he take now? Relatives and friends can be asked here first. Maybe they have already taken out a similar loan and have had good experiences. Another possibility is to visit a credit comparison portal here. All banks that offer a loan are listed here.
However, several portals should always be visited, since not all of them are always listed everywhere. Some banks do not want to be listed at all, but prefer to advertise themselves. They don’t want to be compared with others either.