The overdraft facility is one of the types of credit most frequently used by German customers. In this context, many people do not know that there is still a very good alternative with the call loan. Especially because of the high interest rate, the overdraft facility is usually the most expensive option when it comes to financing. In contrast, the call loan, which is sometimes also referred to as a framework loan, is often much more favorable. Nevertheless, it is important to do a call loan comparison so that you can take advantage of the loan with the lowest interest rates possible.
Call credit comparison
Problem overdraft facility: High overdraft interest despite low interest rate phase
Before we go into more detail about the drawdown loan and what you should look for when comparing them, we'd like to briefly explain a little background on why the line of credit can be a good alternative. The fact that by far the majority of account holders in Germany who overdraw their current account use an overdraft facility is mainly due to the fact that it is very convenient, fast and easy to have the credit line granted.
People immediately become accustomed to using the overdraft facility. Many account holders pay back the debit balance only rarely or not at all. However, the problem with the overdraft facility is that the debit interest to be paid is very expensive. Although the offers now range from about 6.9 to over 12 percent, but on average you still pay for an overdraft facility interest of approx. 9.75 percent. For this reason, it is quite reasonable that you look for alternatives, as it can be the call loan.
What is the call loan?
In many respects, the so-called call credit is comparable to an overdraft facility, but there are also some striking differences. Like the overdraft facility, the overdraft facility is a line of credit granted by the bank to the respective customer.
Unlike the overdraft facility, however, the line of credit is not granted with the corresponding credit line on the checking account. Instead, the bank opens a separate credit account and makes the drawdown credit available there with the agreed credit line. Another common feature between the call credit and the overdraft facility is that you can draw on the credit line at any time, but you do not have to do so at all. In both cases, the interest is calculated on a daily basis, of course, only for the amount that you have actually used from your credit line.
An important feature of the call credit and at the same time another difference to the overdraft facility is that a repayment agreement is almost always made with the bank. Here there are no fixed rates, as would be the case with an installment loan. Instead, the bank and the customer usually agree on a minimum repayment that is based on the credit line utilized.
For example, if you have a call loan in the amount of 5.000 Euro have been granted and this in the past month on average with 2.borrowed 500 euros at an interest rate of 5.6 percent, with a repayment agreement of at least ten percent you will therefore have to pay the bank an amount of at least 250 euros this month.
In sum, the following are the characteristics that can distinguish a drawdown loan in practice:
- Credit line is granted on a credit account
- Amount of the credit limit is often based on three times the net income
- Credit line can, but does not have to be claimed
- Interest rates often (significantly) lower than for an overdraft facility
- Minimum repayment of the debit balance is agreed with the bank
What customers can take advantage of a call loan?
Although the call credit is a credit line and not a loan amount that is disbursed. Nevertheless, the banks apply the same standards before granting the loan as it is the case with other loans.
This means that you must have both the creditworthiness and a sufficient credit rating if you want to be granted the call loan. Credit eligibility is relatively easy to meet, because all you need to do is to reach the 18. have reached the age of 18. With the creditworthiness it is somewhat more difficult and moreover the bank uses here different levers, in order to examine your creditworthiness. Essentially, this is on the one hand the SCHUFA information and on the other hand you must prove your regular income.
Due to the previously mentioned instruments for credit assessment, we can already state at this point that you will probably not receive a call loan if you are burdened with a negative entry in the SCHUFA. This can be, for example, a default summons or an affidavit that you have submitted in the past.
Under these conditions, you will probably be able to use the loan without SCHUFA as the only financing option, because other banks in Germany usually do not grant a loan and also no credit line with a negative SCHUFA entry. However, most banks impose certain conditions not only on SCHUFA data, but also on income if a credit line is to be granted.
For most credit institutions that provide a call loan, the ideal income looks like this:
- Permanent employment contract
- Income from dependent employment (employee relationship)
- Age: 20 to 70 years
- No more probationary period
- Full-time job
- Employed by their current employer for two years or more
- Positive income and expenditure statement, i.e. freely disposable income available
If you can meet all these requirements, which are related to your income, the chance is relatively high that the bank will grant you the desired call loan. Among the popular customer groups of many banks – also with regard to the call loan – are not only employees, but also civil servants and pensioners up to a certain age. In contrast, there are of course some groups of customers who have rather poor chances of being granted a framework loan. This includes the following customers in particular:
- Housewives
- Low-income earners
- Retirees over 70 years of age
- Trainee
- Pupils
- Students
- Unemployed
- Hartz IV recipients
In addition to these groups, it often depends on the bank whether self-employed persons and freelancers are granted an overdraft facility, even if they use it exclusively for private purposes.
In what amount is the call loan granted?
The call loan is a flexible credit line that the bank and the customer mutually agree upon. This means that the bank customer first submits an application that the framework loan, for example, in the amount of 5.000 euros is to be granted. If the bank is then of the opinion that this sum is justifiable on the basis of the income and some other information, in most cases there will be no problems whatsoever with the drawdown of the credit lines. In principle, the amount of the call credit can be freely agreed between the customer and the bank, as is basically the case with any loan amount and any installment loan. However, the credit institutions have of course their specifications and strategies, also with regard to the amount of the granted call credit.
A good orientation mark is therefore often three times the monthly net income, as is also the case, by the way, with overdraft facilities. Although this does not automatically mean that you can not get a higher or lower call loan. But in most cases, you will at least have no problem getting a credit line that is equal to your three times monthly net income.
s an example, if you have a monthly salary (net) in the amount of 2.500 euros, it will probably not be a problem that you get a call loan for 7.500 euros granted. Of course, you don't have to use this credit line, so there are no costs if you use the 7.000 Euro for example only 2.000 Euro to take advantage of. In this case, you would also only pay interest on these 2.000 Euro calculated.
Why is the Abrufkredit comparison useful?
A comparison is now useful in almost all financial areas, regardless of whether it is payment offers, savings deposits, savings contracts, financing in the field of real estate, or even call credit. The reason is simply that there are always differences in the numerous offers in terms of interest rates and sometimes other conditions. So if you do not want to bear unnecessary interest costs in your future call loan, you should carry out a call loan comparison. With this you have the opportunity to find particularly favorable offers and save interest.
How effective a call loan comparison can be and what interest costs you can subsequently save in practice by choosing a favorable bank is illustrated by the following example. In this case, we compare three call loan offers to show that you can save money by comparing call loans:
- Call credit: 8.000 Euro
- Interest rate: 7.9 percent
- Average drawdown: 6.000 euros
- Interest costs for one year: 474 euros
- Call credit: 8.000 euros
- Interest rate: 5.9 percent
- Average utilization: 6.000 euros
- Interest costs for one year: 354 euros
- Call credit: 8.000 euros
- Interest rate: 4.8 percent
- Average drawdown: 6.000 euros
- Interest costs for one year: 288 euros
Had you known only the first of these three offers, because you have not carried out a call loan comparison, you might have paid almost 200 euros more in interest per year than if you had opted for the third offer after a credit comparison. Anyway, a framework loan comparison has only advantages, because it can usually be done anonymously and is basically always free of charge. Merely on the fact that as many offers as possible are compared with each other, you should pay attention to the choice of the credit comparison.
Questions and answers about the Abrufkredit
In the following section we would like to answer some questions about the call loan, which are asked relatively often.
-Question: Why do relatively few banks offer a call loan??
This question is quite justified. Probably you will find the call or. Framework credit not offered by many banks because it is more lucrative from the point of view of the credit institutions to grant an overdraft facility instead. Even in the low-interest phase, interest rates for overdraft facilities still average just under ten percent, while the average interest rate for a call credit provided by some banks ranges between 5.5 and 7.5 percent. So why should the bank of its own accord offer a more favorable framework loan, if you can earn more money with the overdraft facility?! In addition, the workload for the bank is significantly lower for the overdraft facility, because here only a short credit line must be controlled, while with the call credit a separate account is set up.
Basically, with the call credit there is usually the already mentioned minimum repayment of the credit line used. Cancellation in the true sense is only necessary if you no longer want the line of credit made available to you. In this case, an informal notice to the bank is usually all that is needed, and of course, you must pay off the existing debt balance if the line of credit has been currently drawn down.
-Question: Is there a difference between a call credit and a framework credit??
Often in the field of financing you can find several terms that actually mean the same thing. This applies, for example, to construction financing and to real estate financing. Also often used synonymously instant loans, quick loans and express loans. This also applies to the call loan, because the framework loan is nothing more than another name for this credit line. So, de facto, there is no difference between the framework credit and the call credit, but one bank just offers the credit line under one name and the other bank under the other name.
-Question: can I make more than the agreed minimum repayment??
Of course, with the call loan, you always have the option of paying more than the agreed minimum repayment as well. As the name suggests, it is in fact only a minimum amount that you have to pay back starting from the debit balance on the credit account that has been drawn down. In addition, you can, of course, repay a larger portion of the credit line used. This also includes that you completely clear the existing debt balance, so that the corresponding loan account – at least temporarily – is kept with a balance of zero euros.
-Question: Is the call loan better than the installment loan?
This question cannot be answered because these are different types of loans, which can be the optimal financing solution under equally different conditions. Therefore, it can not be said that the call loan is generally better or worse than an installment loan. In the case of an installment loan, the focus is on the fact that you would like to have a certain loan amount disbursed in order to finance a consumer expenditure. You then repay the loan amount drawn down, together with interest, to the lender in monthly installments.
In the case of a drawdown loan, on the other hand, the focus is more on the flexibility of being able to draw down a line of credit again and again as needed. Rarely is the framework loan applied for because a consumer expenditure is to be financed, such as the purchase of a new car. Instead, the call credit rather fulfills the same purpose as the overdraft facility, namely to be able to draw on a credit line in the event of a liquidity bottleneck, which, however, can also be repaid again flexibly.