When applying for a loan from a bank or savings bank, collateral is required to secure the loan. Therefore, you will not get a loan from a German bank without collateral. But why are collateral so mandatory for a loan?
A bank always takes a risk by granting a loan, because the borrower not only has to repay the loan amount himself, but also the interest that accrues. Banks can suffer losses when lending if the loans can be paid in part or not at all. To minimize this risk, a loan without collateral is not possible because the borrower must be able to demonstrate that he is able to pay off the loan taken out. In the event that the borrower does not pay his loan installments, the bank can use the specified collateral to repay the loan.
This would not be possible with a loan without collateral and the bank would have to accept a financial loss. This would not be a big problem with a loan, but if loan defaults would increase with a loan without collateral, the banks would be in dire financial straits. For this reason, borrowers must demonstrate that they are creditworthy before lending.
As a rule, a bank requires proof of a permanent employment relationship and a regular income in the case of an ordinary installment loan. In addition, there is the query of the data at Credit Bureau, which provides information about the creditworthiness and payment behavior of the borrower. A loan without collateral would eliminate all of these checks and increase the risk of default for the bank.
In addition to income and employment relationships, which are the basic prerequisites for granting a loan, banks also accept other collateral. For example, if your income is too low to get a loan and a loan cannot be given without collateral, the lender must find someone who is willing to guarantee the loan.
The bank has a surety for the loan in the form of a guarantor, because if the borrower is no longer able to pay the loan, the guarantor has to step in and assume the payment obligations. Other collateral that can be used for lending are real estate, property-building insurance, shares and also vehicles, which are usually accepted as collateral when a car loan is to be granted.
However, if you are looking for a loan without collateral and will not receive it from a German bank, you can look for offers on the Internet, because a loan without collateral is offered here. Most often, a loan broker can help find a loan with no collateral.