Large debts are unproblematic if they are matched by appropriate assets and the repayment takes place over a long period of time. They are of concern if the payment of credit installments consumes a large part of the income.
This means that homeowners can safely take out a loan despite high debts a few years after the purchase, while other indebted consumers find it difficult to obtain a loan. Existing liabilities are recognizable for full banks in the Credit Bureau information. In addition, the borrower ensures that he can repay all future installments on time despite the existing debt.
The bank loan for high debts
Whether the bank grants another loan despite high debts is less based on the absolute amount of the debt than on the monthly loan installments. These must be commensurate with the disposable income for the approval of an additional loan. Since there are no fixed repayment obligations for the overdraft facility, for a call credit and for the credit card account, these types of credit are generally not taken into account when checking the ability to repay.
However, their use for long-term financing is not recommended since financial institutions charge higher interest rates for these forms of credit than for installment loans. If the bank refuses further borrowing due to excessive existing liabilities, the additional loan can still be taken out with another applicant. In the case of couples, it generally makes sense for the previously less burdened partner to apply for the loan if he has sufficient income. A Credit Bureau-free loan is possible in spite of high debts, since the federal bank is not aware of existing liabilities without a Credit Bureau request.
The amounts are limited to 3500 to 5000 USD, and lending also requires a sufficiently high income from work. Unlike many domestic financial institutions, Cream banks do not take child benefit or any additional income into account in their household calculations, but only the regular wages from their main job. Credit brokers often state in advertisements that their customers get a loan despite high debts and even with low income.
Since the service providers represent a large buying power face-to-face banks, they actually often get a loan, even if the borrower would fail with an application submitted directly to the financial institution. The commissioning of a credit intermediary is risk-free if he works seriously and, according to the legal basis of his activity, only asks an appropriate commission. As soon as an intermediary calculates preliminary costs, doubts about its seriousness are appropriate.
Alternatives to bank loans for high debts
An order on an installment payment basis in retail is possible regardless of existing liabilities, since Credit Bureau dealers only report possible negative characteristics, but no existing debts. So that installment payments can continue to be used as a dedicated loan despite high debts in the long term, consumers make sure that all invoice amounts are paid on time at their main source of purchase. Every delayed payment deteriorates the internal creditworthiness and jeopardizes the future approval of partial payments, while renewed Credit Bureau requests from existing customers are unusual.
On a website for private loan brokerage, a loan can be applied for despite high debts if the lenders registered there classify the intended use as worthy of funding. One of the larger brokerage platforms enables borrowers to either submit their application with or without a Credit Bureau request.
Since private lenders reward complete information through an increased willingness to subscribe, honest communication of the existing debt is recommended in most cases. The fact that traditional banks refuse the desired loan despite high debts encourages private lenders to take out loans for social reasons.
Debt restructuring as a special case
Debt restructuring is a special case of a loan despite high debts. This can be combined with a moderate increase in the total loan volume and is primarily used to reduce loan costs. For this purpose, the new lender will replace all existing liabilities, so that the customer will only have to repay one loan. The savings effect of the debt rescheduling loan is based on the fact that the interest on the new loan is lower than the interest cost of the previous loan.
The particularly costly forms of credit such as the overdraft facility and the credit card credit line are included in the debt restructuring. Long-term successful debt restructuring requires that the borrower behaves in a disciplined manner and does not immediately take up existing credit lines. The new lender ensures the use of the loan to repay the loan by paying the loan amount directly to the current credit accounts wherever possible.