Framework credit – inexpensive alternative to overdraft facility credit

What is a credit line?

What is a credit line?

With a credit line, you have the option of accessing a certain amount at any time. For example, to bridge a financial bottleneck. The call credit is thus similar to the classic overdraft facility for a checking account. The only difference is that the credit line is not linked to an account, the interest is cheaper and the credit line is usually significantly higher.

Think of the credit line as an emergency box, which is initially filled with 5,000 dollars (on-demand credits between 2,500 and 25,000 dollars are offered). This amount is available to you at any time. When, to what extent and for what you use the money is entirely up to you. You can leave it untouched for years without paying a cent fee or interest.

However, if you are in dire need of the money, you don’t have to wait long or apply. Suppose you need 400 dollars for a car repair, go to the pits and take the money. In the case of a credit line, this step is carried out by simply transferring to your account. The credit line is now 4,600 dollars and you have to pay interest for 400 dollars.

How is a loan repaid?

How is a loan repaid?

Most banks only require a minimal standard for repayment or you have complete freedom of choice. That means it doesn’t matter whether you repay 25, 50 or the full amount. Consumer advocates, however, warn against taking any time. Because as long as you still have to pay back money, interest will be charged. The interest rate for a credit line is lower than that for the overdraft facility. In return, the call credit is more expensive than a normal installment loan.

Ideal for short-term loans

This constellation, in which a framework loan moves in price between the overdraft facility and an installment loan, predestines call credits for short-term borrowing. This applies above all to manageable amounts that do not represent an excessive financial burden. To fully utilize the credit line and then repay it in small increments would end up in an expensive credit spiral in the long run. If you want or need to plan for the long term, we recommend an installment loan.

What are the conditions for a credit line?

The same prerequisites apply to a framework loan as to any other loan. As an applicant, you must have a sufficiently high income. This is the only way to ensure that you are able to repay the call credit. In addition, all banks require a good credit rating from our framework credit comparison. Means: Your Credit Bureau file should have no dark spots or negative entries. If you meet the conditions, nothing stands in the way of applying for a credit line.

How to apply for the credit line

How to apply for the credit line

First use our credit comparison to get an idea of ​​the offers. Think about what amount you would like as a financial buffer and which scheme for the repayment suits you best. Then you can click to the bank and apply for your credit line. Fill out the forms and check the data. You can find out which documents the banks need for the call credit in the context of the application. It also explains how you have to legitimize yourself. Identification is usually carried out using the Postident procedure, which you can have carried out free of charge in any post office. The bank will provide you with the Postident Coupon.

How do I get my money on a credit line?

How do I get my money on a credit line?

Once your on-demand credit is set up, you can have the credit line. Depending on the bank, this can be done online or by phone. You determine the amount you need. The money will then be transferred to your checking account immediately. It is not necessary for you to have the call credit and the account with the same bank.

Assuming that you have applied for an on-demand credit for 5,000 dollars and used 400 dollars, you have 4,600 dollars that you can freely use. If you pay back 50 dollars, it is again 4,650 dollars that you have access to. You can make full or partial use of the framework – this is one of the great advantages of a framework loan. You are flexible.

What are the conditions for a credit line?

What are the conditions for a credit line?

The same prerequisites apply to a framework loan as to any other loan. As an applicant, you must have a sufficiently high income. This is the only way to ensure that you are able to repay the call credit. In addition, all banks require a good credit rating from our framework credit comparison. Means: Your Credit Bureau file should have no dark spots or negative entries. If you meet the conditions, nothing stands in the way of applying for a credit line.

How to apply for the credit line

How to apply for the credit line

First use our credit comparison to get an idea of ​​the offers. Think about what amount you would like as a financial buffer and which scheme for the repayment suits you best. Then you can click to the bank and apply for your credit line. Fill out the forms and check the data. You can find out which documents the banks need for the call credit in the context of the application. It also explains how you have to legitimize yourself. Identification is usually carried out using the Postident procedure, which you can have carried out free of charge in any post office. The bank will provide you with the Postident Coupon.

How do I get my money on a credit line?

How do I get my money on a credit line?

Once your on-demand credit is set up, you can have the credit line. Depending on the bank, this can be done online or by phone. You determine the amount you need. The money will then be transferred to your checking account immediately. It is not necessary for you to have the call credit and the account with the same bank.

Assuming that you have applied for an on-demand credit for 5,000 dollars and used 400 dollars, you have 4,600 dollars that you can freely use. If you pay back 50 dollars, it is again 4,650 dollars that you have access to. You can make full or partial use of the framework – this is one of the great advantages of a framework loan. You are flexible.

The disadvantages of a credit line

The disadvantages of a credit line

We have already mentioned the biggest disadvantage of a credit line: it is more expensive than an installment loan and therefore not suitable for long-term planning. If you take too much time with the repayment, you pay extra. We therefore advise you to use the credit line only moderately and to draw up a plan for the repayment. Think about the steps in which you can return the amount. If the period is too long, an installment loan may be appropriate. Then compare which option is better for you – in the sense of cheaper.

Conclusion: Financial freedom on good terms

There are advantages and disadvantages to the fact that framework loans move between overdraft facility and installment loan and are functionally closer to the overdraft facility. The positive thing is that you are free to decide what amount to call and how to pay it back. On the negative side, there are high costs if you spin or repay too long to balance the credit account.

The bottom line is that the benefits of a credit line outweigh the benefits. Having a financial cushion can never hurt. Because nobody is immune from unexpected expenses. The best examples of this are a defect in the washing machine or a flat tire. Instead of taking out an installment loan and having to repay the money in fixed installments for several months, you have a free hand with a call-off loan. And you pay less interest than with an overdraft facility. In short: if used sensibly and moderately, the credit line is ideal for short-term purposes. You always have a fixed amount in hand and therefore a certain financial security.

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