Taking out a loan is commonplace nowadays. Usually, larger projects are to be financed or at least supported in this way. The model of so-called short-term loans is still relatively new in Germany and is therefore often unknown. But a short-term loan can be a useful alternative if you want to borrow a manageable amount of money from time to time.
What do you do with a short-term loan?
As already mentioned, a short-term loan is primarily designed for borrowing smaller amounts of money. These amounts of money usually range between one hundred and three thousand USD. Repayment of the borrowed amount usually has to be made within thirty days, but some credit providers offer to extend the deadline to a total of sixty days. If you want to make use of a short-term loan for the first time, the maximum amount that can be borrowed can be five hundred USD.
If you subsequently prove to be a reputable business partner who meets your payment obligations as agreed, you can also borrow higher amounts. The interest rates are – for example, assuming a loan amount of one thousand USD – between about thirteen and fifteen percent.
Since this type of loan embodies a short-term loan, the short-term loan is particularly suitable for bridging short-term financial bottlenecks. Possible situations in which a short-term loan can offer an ideal solution can be seen, for example, in a car repair or an unexpectedly replaceable household appliance.
Short-term loans and Credit Bureau
While obtaining a loan in Germany is usually linked to the fact that there are no negative Credit Bureau entries about the potential borrower, the situation in the context of a short-term loan can be a little different. However, you also have to meet certain basic requirements here.
In general, it can first be stated that the approval of a short-term loan is viewed from a different perspective, since both the lower amounts compared to conventional loans and the short term of the loan pose a lower risk for lenders. Although a person on the verge of personal bankruptcy will not receive a short-term loan, short-term borrowing is still possible even with a rather medium Credit Bureau value.
Nevertheless, it should of course be borne in mind that this form of loan can only be approved if the applicant has a certain basic creditworthiness. So if you want to apply for a short-term loan, you should have a regular income and also consider in advance of your decision whether the rapid repayment of the borrowed money should be combined with your other expenses.