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Topic Consumer protection Loans

If you are unable or do not wish to use your own funds to cover your financial needs, you can take out a loan. You have to pay interest on the amount borrowed. In Germany, loans are offered not only by credit institutions but also by insurance companies.

Ar­ranged and unar­ranged over­drafts

Arranged overdrafts (Dispositionskredite) and unarranged overdrafts (Überziehungskredite) are primarily used to cover short-term unspecific financial needs. The interest charged on these overdrafts is comparatively high. Credit institutions grant these facilities to their customers when they open a current account provided money is regularly paid into the account. You can find out more about arranged and unarranged overdrafts in our section on current accounts on the BaFin website.

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In­stal­ment loans or con­sumer loans

Instalment loans (Ratenkredite) or consumer loans (Konsumentenkredite) are mostly used for a specific purpose, such as financing a car purchase. They are taken out for a pre-agreed fixed term and usually repaid in monthly equal instalments. With the exception of certain small loans (Kleinkredite) and short-term loans (Kurzzeitkredite), credit institutions are legally obliged to carry out an assessment of the customer’s credit worthiness.

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Cred­it lines

If you have arranged a credit line (Rahmenkredit), often also known as a contingent facility (Abrufkredit), you can borrow money at short notice at any time. Credit lines are floating rate loans, i.e. the interest rates are variable. A credit line offers you the flexibility to draw on amounts of money whenever you need them. This could be the full amount or partial amounts. You only pay interest on the amount you have called up.

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Buy-now-pay-lat­er

Buy now, pay later – a convenient way to finance purchases. Just a few clicks are needed and the payment is postponed until a later date. There is often one drawback though – at some point you have to pay for the goods you ordered and decided to keep. What is more, postponing a payment is not always free of charge, and you might have to pay interest and fees. On top of this, you need to be quite disciplined and keep track of everything if you want to make frequent use of this means of payment.

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Mi­cro loans, small loans and short-term loans

When consumers take out a loan, special rules normally apply that are designed to protect their interests. In the case of micro loans (Minikredite), small loans (Kleinkredite) and short-term loans (Kurzzeitkredite), these rules do not apply. It is not necessary to sign a written agreement for these loans, and you also do not have a right of revocation. Before making use of such an offer, we recommend that you take a close look at the costs and interest rates of the loan.

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Com­par­ing con­sumer loans

Money is tight. You lack the funds to fulfil a wish or finance something necessary, such as a move or repair work, and require a loan in the region of several thousand euros. German banks and savings banks (Sparkassen) as well as retailers and other credit brokers offer an array of loans and other finance options for such purposes. You can save money by looking around and comparing offers. Unsure about what to take into account when looking for a loan? BaFin explains the most important points to consider.

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