The Installment Loan: A Savior in Need?

An installment loan can be a rescuer – after applying you get the desired amount and pay it off in installments including interest

An installment loan is always available when you need a certain sum quickly: It’s the end of the month and the fridge gives up the ghost – or the electric bill gives you a little panic attack – almost everyone knows such horror moments and most of the time they happen exactly then if you are not liquid.

The special financing method of installment loans is useful if you need money at short notice and have no savings or do not want to resort to them.

Since installment loans are usually meant to acquire certain things, they are also known as consumer loans . It is the most common type of loan when it comes to consumer finance.


A little historical insight: installment loans have been given since the mid-1950s and have their origins in German mail order companies. These gave their customers the chance to pay for major purchases in installments and cooperated with installment banks. As consumer spending increased, enthusiasm for installment loans also spread, which quickly benefited banks and savings banks.


Credit line for installment loan

Credit line for installment loan

A rescheduling always makes sense if you realize that you are getting into arrears with the repayment of your credit. An installment loan with fixed installments and a regular term saves money and provides security.


Your credit rating

Your credit rating

A credit rating , which should express your probability of payment. Employees with an open-ended employment contract and a positive credit rating have good chances. Only if there are no negative entries, such as orders for dunning or enforcement or even delays in credit reporting, can the bank ensure that the installment loan is also paid punctually and reliably.

Not only a good credit rating is required, but above all a sufficient budget surplus, after all, the rate should be paid by this money. To determine this surplus, the bank asks not only the credit rating but also the salary, monthly expenses and current loans. Account statements and salary statements serve as proof of the information. Importantly, the rate should never exceed the surplus.

Installment credits are also usually granted without collateral . Collateral is a previously agreed hedge of the borrower against the bank, so that in the event of a default, the loan will continue to be repaid. These can be, for example, salary or surety bonds.

Tip: Become active yourself and always keep an eye on your credit rating. It’s easy with Charles Swann: just sign up, check your data, correct if necessary and monitor and actively improve the credit score.




The purpose is a good thing, could help to better conditions or even use the credit score. For example, if you take out a car loan , you may get good interest rates because the bank has the right to sell the car in the event of default. A rescheduling should communicate that it is not a new debt, which in turn benefits the credit rating and the monthly installments.

students , retirees and the unemployed as well as freelancers and entrepreneurs. One possible solution in this case is to include a second borrower in the contract. This second party increases the likelihood of adoption, since now the income of both borrowers is added together and both are jointly and severally liable.



Leave a Reply

Your email address will not be published.