The most important word that occurs with all installment loans is the term “credit rating”. It is therefore all the more surprising when some banks advertise that they can use an installment loan that is independent of creditworthiness. From time to time, borrowers also want exactly such a loan and thus reveal the diversity of the German language, because they mean different things.
An installment loan that is independent of creditworthiness: What is creditworthiness?
Since creditworthiness plays a key role when a non-creditworthy installment loan is offered or requested, it should be briefly presented here: Creditworthiness is the technical term for the rather bulky word “credit repayment ability”. A distinction is made between general and current creditworthiness. The current creditworthiness is calculated according to the income of a person and the cost of living as well as the so-called inevitable expenses.
Both are deducted from income and what is left is the amount that a person can theoretically spend to pay off a loan. The general creditworthiness wonders whether this current sum is also permanent: is it a temporary or permanent employment contract that guarantees income? If you read this, you know why self-employed people have such great problems proving their creditworthiness.
A non-credit installment loan: what does a borrower understand by this?
When a borrower applies for an installment loan that is independent of their creditworthiness, they wish that their creditworthiness is irrelevant when checking the creditworthiness. However, this will never happen, unless you know a surety who is extremely wealthy at his side. The creditworthiness is far too important for that.
An installment loan that is independent of creditworthiness: So what does the bank mean?
So the question is all the more exciting, what does a bank mean when it makes such an offer? It is about the interest rate that is calculated on a loan. Usually, this is measured by the creditworthiness. The worse this is, the higher the interest rate. However, some banks offer fixed interest rates instead and ignore the creditworthiness. In this way too, an installment loan can become independent of the credit rating.