Get A Loan In Germany as an Foreigner [2024] - Navigate Germany

Being an expat in germany, you might need a bank loan to purchase a house, or a car. Here, you have landed at the right page to know different types of loans, application procedure, and eligibility requirements.

Kinds of loans in germany

RatenKredit – Installment Loans

Installment loans are the most common kind of loans in Germany in which you return the loan with variable monthly payments. 

RahmenKredit – Personal Credit Loan

Personal credit loan is a personal loan that has fixed monthly installments.

AutoKredit – Car Loan

A car loan is a secured loan which is based on fixed installments. This loan is only for purchasing a car. The car you purchase through a car loan will be considered as your asset.

SofortKredit – Instant Loan

Instant loan is a loan that you get within a few days (instantly after applying) interest rate to repay this loan is comparatively greater than other kinds of loans and the credit range is less.

Immobilienkredit – Mortgage

A mortgage is also a secured loan that is used to purchase a house. The house or apartment you purchase with this loan will be your asset.

Eligibility Criteria to Get a Loan in Germany

It is not easy to get a loan in Germany because of Germany’s credit conservative approach. Here are the basic requirements to get a loan from a bank at a reasonable interest rate.

• Credit score (SCHUFA) must be good.
• Submit your salary slips to prove the stability of your income source. If you are a freelancer, share your monthly bills, or submit a written letter from your client to prove the regularity of your online work and potential earnings.
• You must be a resident in Germany. Submit the residence permit or VISA.

If you do not meet above criteria, you can find other financial institutions offering credit loans, but at higher interest rates.

Loan Options in Germany

You will find a lot of organizations and online platforms offering loans in Germany. Online loan options are more popular than those of traditional banks because of the speed and easy procedure. Here is the list of online and offline loan offering platforms.

• Traditional banks
• Credit institutions
• Peer to peer lending
• Mini loans
• Loan comparison platforms
• Loans with poor credit score

Traditional Bank

Visit a bank whenever you plan to get a loan in Germany and consult your case with the management to know the possibilities. Banks operate in a traditional way so no online options are available. Visit in person, or discuss all the details on call. Having a good credit score or a stable income source will benefit you with the low interest rates. Some of the best banks to get loan are;

• Santander
• 1822direkt
• DKB
• SKG

Credit Institutions

Getting a loan from a credit institution is much easier than that of traditional banks. If you are getting a short term loan, the interest rate will be low (4-10%). CrediMaxx and Barclays Credit are the best options. You can get a loan between 500 Euros to 300,000 Euros through credit institutions for 12 to 120 months. There is no need to have a good credit score but submit your monthly salary slip. 

Peer-to-Peer Lending

Peer to peer lending is based on an online marketplace of borrowers and lenders in which an investor invests their funds in the website and borrowers get the money from the website. It is an easy and speedy method to get a loan in Germany and chances of getting a loan are also high. Your credit score does not matter and you can get a loan with a bad or negative credit score too. The interest rate while repaying the loan ranges from 3 percent to 14 percent. Auxmoney is the largest loan provider in Germany that offers a favorable interest rate and the loan amount is between 1000 Euros to 120,000 Euros.

Mini Loans

Mini loans are the most common kind of loans in Germany for foreigners and expats who need money on an urgent basis. You can get the credit instantly (within few hours) after applying online.This loan type is common especially among foreign nationals. These loan amount ranges between 500 Euros to 1500 Euros with a higher interest rate of up to 15 percent. Some of the mini loan options are:

Minikredit.de and Vexcash are two options to get a mini loan in Germany. Vexcash offers a loan of 500 Euros to their new customers that will be converted to 3000 Euros if you pay within a month.

Loan Comparison Platforms

Comparing the loan offers is a great way to decide which option is best to acquire. Here are a few loan comparison platforms in Germany.

• Verivox is a SCHUFA-neutral platform that helps to compare all kinds of loans, insurances, electricity plans and internet deals. You can get a loan up to 100,000 Euros with a payback period of up to 10 years.
• Loanlink24 is an English platform that specifically offers comparison of different mortgage options. Their offers are published by more than 400 banks in germany.
• Tarifcheck is an online platform to compare the variety of loans and mortgages. Select your loan amount and the duration to see the available options.
• Smava is the first FinTech company in Germany with a 5-star rating. Use Smava to apply at different banks such as Sparkasse, Postbank, Unicredit, Commerzbank, and Deutsche Bank.

Loans with Poor Credit Score

It is very difficult to get a loan with a poor credit score but it is not impossible in Germany because of the financial institutions in Germany.

Maxda is a bank in Germany that offers loans up to 7500 Euros with a payback period of 40 months even if your credit score is bad. To avail this offer, you must have a monthly income of 1130 Euros and your age must be between 18 and 60 years. If you do not meet the monthly income or age criteria, get a loan by bringing a guarantor to the bank.

Important Consideration to Get a Loan

While applying for a loan in Germany, ensure that you know these tips to ease your process.

Right Loan Type and Provider

When planning to get a loan in Germany, choose the right type of loan and right loan provider.

For example; if you are buying an apartment, you must apply for a mortgage and pay at least 20% down payment to increase your chances of getting a loan. If you are planning to buy a car, visit a car dealer to get advice on best options to get a car loan.

schufa score

Credit score is very important to get a loan in Germany. If you have a good credit score, you will get the best loan offers with lower interest rates. Improve your score to increase the chances of getting a good loan.

Loan Amount and Duration

Think about the amount of loan and payback duration carefully. Calculate it after careful consideration to avoid future issues.

Apply for Loan with Another Person

If you cannot apply for a loan yourself, you can apply through someone else, for example, your spouse or a friend. This way, risk will be minimized and the interest rate will be low.

Make Comparison

Do not choose an offer with a random selection. Compare different plans to make an informed decision.

Conclusion

Whenever getting a loan, plan it carefully and do not rush to choose the first offer from the first provider. Get a loan with a lower interest rate. Try to improve your credit worthiness to make it easy to get a loan in future.