1. Draw up a household budget
Moving to a new apartment or your own home incurs costs. Large expenditures include fees for moving and cleaning companies. You might also want or need to buy new furnishings or appliances.
Make a budget for all the costs associated with the move, including the price of your desired furnishings. A household budget sometimes includes living expenses, taxes or insurance premiums. You should budget for a financial buffer in case the unexpected happens. In principle, you should plan in such a way that you can do everything with your own resources.
2. Estimate your own credit standing in advance
Are your own resources not enough? Then you should make a realistic assessment of your creditworthiness before going to the lender. What many people don't know is that negative loan decisions are registered with the Central Office for Credit Information (ZEK) for two years and can be viewed by all private lenders.
A rejected loan application can reduce your chances of getting a loan on favourable terms elsewhere. What makes this difficult is that each bank applies its own risk criteria. For security reasons, these are not made known to the public.
3. Beware of "bait" offers and dubious providers
Personal loan providers often advertise very low interest rates. However, only customers with excellent credit standing benefit from this. Borrowers should steer clear of lenders who demand up-front payments, advertise immediate cash loans, or are prepared to grant a loan without undertaking a credit check first.
According to the Consumer Credit Act (KKG), such procedures are prohibited (link not available in English). Trustworthy lenders do not make such promises. When lenders make these kinds of claims, they are usually fraudsters based abroad.
4. Only pay for durable products with a loan
You should only finance long-lasting household items with a low loss of value. As a rule of thumb, the loan term should always be shorter than the lifetime of the product.
5. How much does a personal loan cost?
The monthly instalments are based on the loan amount, the term and the agreed-upon interest rate. The interest rate depends on your creditworthiness. Currently, the classic credit market requires annual interest rates between 4.4% and 10.95%.
6. Be cautious when it comes to instalments and credit card purchases
If you decide to pay for your household furnishings or appliances by credit card or loyalty card, you should take a close look. This is because it is not the maximum interest rate of 11% for personal loans that applies to them, but rather 14%. In the case of a payment by instalments, the item belongs to the merchant until the last instalment is paid. In the case of a loan, on the other hand, it goes directly to the buyer's possession. In any event, please always check the conditions and fine print carefully.
