Whether as an employee or self-employed, sometimes the financial situation requires taking out a loan.
If the money is needed very quickly, the immediate or urgent loan comes into question, in which the requested amount of money should be transferred to the borrower’s account within two to three bank working days.
What is an instant loan?
An instant loan is an installment loan that is paid out in a shorter period of time. Although there is no official definition for this loan, banks generally adhere to the rule that an instant loan is available to the borrower very quickly.
Because of the significantly shorter processing times and a mostly simplified application check, the interest surcharge for an immediate loan is higher than for an installment loan with the usual processing time.
As a borrower, you do not have to specify a specific purpose to apply for an instant loan, ie you can spend the money for what you want.
Who needs short-term financing for a car purchase or another project can quickly apply for credit at bankofscotland.de. This direct bank offers the loan application as a completely digital transaction, so that the process from application to loan payment can be completed in one day.
In addition, the online loan calculator provides important information in advance about the amount of the installment in combination with the term of the contract, so that you know which payment requests are expected each month.
How much can an instant loan be?
The amount of credit granted depends on various criteria. This includes:
- Credit rating:
The better the financial situation and the higher the borrower’s savings, the more likely the bank will be ready to grant a loan – even a very high one. The credit rating criteria can differ from bank to bank.
- Monthly income:
If you have a high income as a borrower, it is easier to get a high loan amount.
- Fixed employment:
A permanent employment relationship is a very important criterion for lending. After all, an employment contract that has been going on for a few years means for the lender that the loan is most likely to be repaid.
For this reason, it is difficult for the self-employed and freelancers to obtain an instant loan because they do not have a secure income (see below).
- Credit entry: If this is negative, many banks do not grant credit.
- Purpose of the instant loan: This can also be of decisive importance for the amount of the loan. Those who need the quick credit for a car purchase should have fewer problems than someone who wants to fulfill a private wish with the loan. After all, the car can be used as security for the bank.
In general, instant loans – depending on the bank – are raised between 500 and 50,000 dollars. The loan repayment ranges from 12 to 84 (less often: 120) monthly installments, some banks also offer special repayment options and even rate suspensions.
With high loans, the borrower should opt for a longer term and lower monthly installments, which reduces the likelihood of being in arrears. Because especially term extensions and overdraft interest cause high costs that should be avoided.
If the financial situation allows, you can try to pay off a higher amount of the loan at the end of the year.
Instant credit: advantages
A big advantage of the instant loan is the online application and allocation. The borrower can complete the individual steps on the computer and does not have to go to the bank in person. It is also possible to apply for a loan at the weekend.
Since instant loans are very often granted by direct banks that do not have expensive branches and a large number of employees, the interest on an instant loan is significantly lower than with a traditional house bank.
Instant credit: disadvantages
The instant loan can be applied for quickly – ie in a few minutes – by the borrower, but the decision as to whether the loan is paid usually takes several days.
Because only after the proof of income and the other required documents have been received and checked by mail at the bank, does the financial institution decide on the loan payment.
A second disadvantage can be that you, as a borrower, feel a little unsafe when applying, because you don’t have an expert at your side if questions arise. However, the online applications are generally very understandable and clear, so that there should be few problems.
Is an instant loan possible for the self-employed?
An instant loan would also be an opportunity for the self-employed and freelancers to quickly obtain the capital they need for an important purchase.
Since these occupational groups do not have a secure income and may not have any other collateral to offer, they are unlikely to find such an installment loan, or only with difficulty. After all, the bank wants security that the loan installments can be paid monthly.
However, there are banks that offer special instant loans for the self-employed. The conditions to be met are as follows:
- The self-employed person should be self-employed for at least two to three years.
- The place of business should be in the country.
- Income tax declarations and notices, business evaluations, balance sheets and a profit and loss account for the past two to three years are often required.
- Savings deposits or life insurance policies or a guarantor with their own regular income will also have a positive effect on lending.
If a self-employed person or a freelancer fulfills these conditions and receives an instant loan, he should negotiate free special repayments with the bank. Because he can pay off the loan faster if the order situation is very good.
An instant loan is ideal if a larger financial project is to be realized quickly. With direct banks in particular, the application process is quick and uncomplicated.
In any case, you should obtain an offer from at least two direct banks that are adapted to the individual situation, and then decide on the cheapest financing offer.