Expat in Berlin - Getting a Loan as a Foreigner

Contributed by Welcome Center Malta, 11 June, 2020

Berlin is one of the most renowned cities in the world as a haven for expats and foreigners. Almost a third of its residents possess a non-German background with tourists and professionals drawn from all over the world visiting the city each year, because of the high quality of life, exciting nightlife, ample nature and the liveliness of the city, from the Berlin residents.

There are many reasons why expats decide to call Berlin home. Once your daily life starts in Berlin, so do the responsibilities, opportunities, and life projects all intertwined as one, often resulting in the need for a loan. This guide will highlight the key features and requirements for getting a loan as a foreigner in Berlin.

Getting a Loan as an Expat in Berlin

Most individuals, at some point in life need or want a monetary injection to propel and facilitate their smooth stay in Berlin. This can be either for buying an apartment in Berlin, buying a vehicle to ease movement across town, or a smaller loan to get a business up and running. In either case, a loan will assist with making your visions and investments. a success.

For all foreigners, acquiring a loan in the city might seem like a rather daunting task, especially given the terms and conditions from the German banking institutions around. This piece, however, provides a detailed overview on ways to secure loan facilities in Germany, as well as helping the potential applicant in having the right information to securing the right type of loan facility, all while being aware of the guidelines, requirements, and procedures of getting a loan as a foreigner in berlin.

Rules and Procedures

As it is with every other city in the world, rules, and procedures for getting a loan as a foreigner in Berlin have to be followed to the latter whether by citizens or foreigners. Usually, this comes as a commitment by any borrower to receive an agreed-upon amount from the lender, agreeing to pay back the total amount borrowed in full, and with some added interest on top of it at a pre-defined period. This gives the lender enough confidence in making profits from the interest accrued from the additional fees on top of each installment repaid.

Interest Rates

In every case, the interest rates in Germany are usually defined by the level of trust the lender affords the borrower, and by the level of risk, the lender incurs from the borrower. In this case, the higher the risk, the higher the interest rates, and vice versa. Certain factors that help lenders assess borrower's risks in getting a loan as a foreigner include;

Types of Loans for Foreigners in Berlin

Consumer Credit

This type of loan can also be referred to as installment credit. Under the terms provided, borrowers are under no obligation to state their intent in getting the loan from the bank or the lender. Foreigners commonly use this loan in purchasing home appliances and furniture.

Car Loans

With this loan, the interest rates are usually much more favorable than with the consumer credit rates, since the aim or intent of the loan is clearly stated and with the car itself acting as the security in case of any defaults.

Overdrafts

An overdraft is usually seen as an extension of credit where the bank allows an account holder to withdraw more money than they have in the account. This allows account holders to overdraw money up to a certain limit.

Credit

In this case, banks or lenders provide credit cards to account holders allowing them ATM withdrawals and expenditures on all their purchases. In this case, the interests usually go higher especially if monthly repayments are missed.

Securities Loan

These usually come as secured loans where the borrower pledges some assets as securities for the loan. An example is where an account holder can deposit assets such as stocks, and funds as securities for a bank loan if they hold a security account with the banks. This type of loan usually attracts favorable rates for the borrower especially when made upfront. And it can also be used in several purchases.

Mortgages This is one of the most favorable and cheapest options for buying an apartment in Berlin in getting a loan as a foreigner in Berlin since the whole property itself is enough security for the bank until the full amount of the loan facility is paid off.

Self-employed and Company Loans

For lenders in Berlin, this is one of the types of loans that possess the highest risks, and in which cases generally make all banks and lenders act more cautiously by increasing the interest rates.

Short-term Loans

When looking at different types of loans, this provides the easiest and quickest option. This loan is used for usually a short-term 30-day loan. For new customers, the loan is usually capped at 500 Euros and some also allow some returning customers to secure much more attractive loan sums with further repayment periods.

Tags: Mortgages | Personal Finance | Finance | Germany |

 

 





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