Who does not know the situation that the electric market offers a top special offer, but the credit on the account is not enough to realize it. It is uglier, if at the end of the money still plenty of month is due. In both cases, the credit line can be the solution for the account holder. But what distinguishes the Dispo from a traditional, classic loan?
Prerequisite is the checking account
In contrast to a installment loan, a credit line is basically linked to a checking account. The disposition credit is also known as overdraft. This is the essence of this, loan variant clearly. The bank customer covers his account, goes into the minus. The overdraft can not be used on a savings account or money market account; it is exclusively tied to a checking account. If the MRP moves in a conventional framework, the account holder need not provide any collateral. The overdraft facility is based exclusively on the creditworthiness of the account holder. There are, however, exceptions. Self-employed persons, who have high fluctuations in the balance of their account and massively overdraw their account due to payments due on outstanding payments, may need to provide collateral.
The account opening
Banks grant a new customer only limited access to an open account when opening an account. As a rule, they wait three months for how the account management is handled. With regular and consistent cash receipts, an overdraft line is then granted, in most cases double or triple receipt. For this credit line, in contrast to an installment loan, not even a salary assignment is agreed.
The interest rate on a credit line
The banks have been in the crossfire for many years with regard to the level of disparities on the part of the consumer advocates, but also on the part of politicians. Interest rates are in most cases in the double-digit range, even at historically low interest rates, 14 or 15 percent are not uncommon. Financial experts have determined that a dispensation of ten percent from a business point of view is sufficient. This is also shown by the institutions, which charge only seven or eight percent for overdrafts, as shown by a comparison. In the context of interest rates, however, a distinction must be made between two situations:
- Approved overdraft
- Unapproved overdraft
Some banks allow their customers to overdrawn beyond the agreed line. In this case, a higher interest rate has so far been applied throughout. However, more and more institutions are finding their way out of this practice and calculating a uniform interest rate.
With regard to the above-average interest rates, credit institutions argue that the credit default risk is significantly higher than with a secured installment loan. The interest rate still praises the risk of the lender.
A repayment agreement exists only in exceptional cases for a credit line. Only if the agreed line has been overdrawn, is a repayment below the granted limit agreed. Alternatively, however, it may also happen to the bank customer that he receives a letter from the bank with which the amount in excess of the agreed limit is due within ten working days, that is, must be repaid.
The danger of the emergency loan
A posting is a practical matter. If there is no money, you can access the overdraft line. However, the risk lies in the fact that the line granted, as already mentioned, exceeds the current income. If the MRP has now been used at a level higher than the cash inflow, the credit spiral is preprogrammed. As long as there are ongoing expenses, the overdraft can not be returned from current income. At the end of the debt restructuring is in installment loan.
Who plans a major purchase, or knows that he will take the Dispo for a long time, should decide from the outset for a classic installment loan. On the one hand, the repayment is made in clearly agreed installments, on the other hand the interest rates for a installment loan are significantly lower than those of the overdrafts. The risk of the credit spiral and over-indebtedness is thus significantly lower.