Small loan – take advantage of our affordable offers!

In Germany, many people take out a loan mainly when they want to finance a house or a car. However, it is often overlooked that small loans of up to 5,000 euros still make up the lion's share of financings. A small loan is especially useful when you need to overcome smaller financial hurdles in everyday life. These can be important replacement purchases and repairs as well as the financing of certain wishes. But what exactly is a small loan? How does it work and what should be considered when applying, especially regarding the loan application? Below we show you what you need to know about a small loan and how we can help you find affordable financing through a comprehensive comparison of providers.

Small loan – what is it?

A small loan is a conventional installment loan that is repaid in fixed installments. While the installment amount remains the same throughout the term, the proportions of interest (interest rate) and principal repayment change with each installment. This is because interest is always calculated only on the outstanding debt. The only special feature of a small loan is that it is available with relatively small loan amounts. These range between 1,000 and 5,000 euros. In addition, there are providers of mini loans who already finance loan amounts of a few hundred euros.

What are the advantages of a small loan?

A loan with a small loan amount has some advantages and special features due to its structure that can make it attractive for many borrowers:

• Low loan amounts: Usually a loan amount up to 5,000 euros is considered a small loan. Some providers even set the limit at 3,000 euros.
• Good chances of approval: Although the same requirements generally apply to small loans as to larger installment loans, the chances of approval are higher. For a small loan amount, a lower disposable income is often sufficient in terms of the income situation.
• Low repayment installments: Since a small loan usually involves a low loan amount, the repayment installments are also at a lower level. This applies even if a relatively short term is chosen.
• Low interest rates: As the loan amount is low, the default risk is usually smaller – after all, 1,000 to 2,000 euros can often still be paid off somehow. Banks reward the lower risk potential with lower interest rates.

When is a small loan sensible?

A small loan is a sensible supplement whenever you cannot or do not want to make certain expenses or purchases in everyday life immediately from your income or financial reserves. There can be many different reasons for this:

• You need money quickly and your assets are tied up
• You currently do not have the desired amount
• You do not want to touch your financial reserves for a specific expense
• The interest on your overdraft facility is significantly higher than for a small loan

A refinancing of existing small liabilities or replacing an overdraft facility can also be a useful use for a small loan. You should always ask yourself the following questions beforehand:

1. How urgent or important is the respective expense?
2. Can and do I want to cover the money from my own funds?

Normally the purpose of use for small loans is not predefined – you can use the loan as you wish.

What are possible reasons for applying for a small loan?

There are numerous uses for the money from a small loan. Below we present some common reasons in more detail:

Boost your travel budget – the vacation loan

Whether you finance the entire trip or just want to top up your travel budget – a small loan is perfect for somewhat more expensive trips as an additional source of financing. Even a small loan amount helps. The following components of a vacation typically stand out:

• Accommodation (hotel, guesthouse, holiday apartment)
• Arrival and departure (plane, train, car, ship)
• Meals
• Expenses for activities at the destination (travel pocket money)
• Costs for travel insurance (travel health insurance, cancellation insurance)
• Costs of accessing money (especially interesting outside the Eurozone)

With a small loan as vacation financing you remain financially flexible and can also fulfill special wishes that might otherwise not fit into the budget.

Driver's license financing – with sufficient capital to obtain your license

Financing your driver's license is a very good reason to use a small loan. Most people obtain their license at a young age and usually do not have the necessary capital at that time. If relatives (parents or grandparents) cannot step in financially, a small loan can be a viable option. Before applying for the loan, however, you should consider a few aspects:

1. Calculate the loan amount generously: The costs for a driver's license are often difficult to estimate exactly. After all, it can always happen that you need one or two more driving lessons than expected or have to repeat an exam. For this reason it makes sense to plan an extra 150 - 300 euros from the start – this gives you a safety buffer. If you do not need it, you can repay the surplus as an early repayment if the loan agreement allows special repayments and thus reduce the loan costs.
2. Options for difficult approvals: As accompanied driving from 17 is increasingly chosen today, loan approval can often be difficult. Loans may only be granted to adults in this country. In this case the parents should take out the loan. They can also act as a second borrower if the creditworthiness of a young but adult borrower (e.g. student or trainee) is not sufficient to obtain a small loan.

If you plan for these two points from the outset, nothing stands in the way of the payout of the loan and financing the driver's license. We help you find a suitable small loan and obtain the best possible terms for you.

Finance a motorcycle – get on the road with a small loan

Do you dream of adventurous motorcycle tours on the well-known roads and routes of this world? In this case the payout of a small loan could help you finance the motorcycle you want. Since motorcycles usually do not involve very high purchase costs, small loans are often sufficient for the loan amount. Still, there are arguments for choosing a vehicle loan (in this case a motorcycle loan) with a designated purpose:

• Better terms: When you purchase a motorcycle you acquire an asset that can serve as a kind of collateral. You are not simply spending the money but exchanging it for another value. This can positively influence the credit assessment and improve your terms for the motorcycle loan.
• Tailored offers: If banks know the purpose of a loan, they can present tailored offers that fully meet your needs.

If you're interested in financing a motorcycle, contact us. Together we will find a purpose-bound small loan that fits your needs and offers very favorable interest rates.

Bridge loan – overcome financial bottlenecks with a small loan

Small loans are also well suited to bridge financial bottlenecks. Many people usually use the overdraft facility on their current account for this purpose. However, this is usually significantly more expensive and thus causes unnecessary costs. A small comparison calculation illustrates this:

Table 1: Cost comparison between an average small loan and an overdraft facility

In this example the overdraft facility is not repaid at all initially. This is possible because there is no fixed repayment schedule; you as the borrower can choose the repayment. The interest would therefore also decrease somewhat with an overdraft facility if you made regular repayments. Still, the interest costs would remain at 157.61 euros and thus almost twice as high as for an average small loan.

Wedding loan – the small loan as pre-financing

Although weddings are still rarely financed with a loan today, such a step can be worthwhile. After all, the costs for many wedding couples can quickly get out of hand at a larger celebration. The following cost items are particularly significant:

• Venue (several hundred to several thousand euros)
• Catering (between 20 and 100 euros per person plus drinks)
• Band or DJ (between 200 and 1,200 euros)
• Wedding dress (a few hundred to several thousand euros)
• Wedding rings (100 to 1,000 euros)

The hesitant attitude of many couples toward taking out a wedding loan is not surprising, as no one wants to start married life with debt. Fortunately, this is usually not necessary, as the following example calculation shows:

Table 2: Financing options for a wedding loan

If you choose a small loan as a wedding loan, you use it primarily as pre-financing because a large part of a wedding celebration is often covered by the guests. Few couples still want household gifts today (the household is often already complete); instead they state in the wedding invitation that they prefer cash gifts. To make the wedding loan as inexpensive as possible, you should definitely choose the option of free early repayment. Such loans can be found relatively easily today. After the wedding you can simply transfer a large part of the cash gifts back to the bank and save a lot of interest. In the example above there is still enough money left for a honeymoon.

Choosing a small loan – what to look for in the terms?

Are you interested in a small loan but want to prepare before choosing a loan? No problem – we explain which decision criteria are particularly important for a small loan:

1. Effective annual interest rate

Even for small loans, the effective annual interest rate is the most important comparison criterion, because it determines the costs you have to bear for the requested financing. It is very important not to confuse the effective annual rate with the nominal rate. While the nominal rate only reflects the interest costs, the effective annual rate also includes numerous ancillary costs of a loan. The calculation of the effective annual rate is specified in §6 Preisangabenverordnung (PangV) and therefore also includes the costs for:

• The brokering of a loan
• Account management fees (if required)

Costs that are not an obligatory part of the loan contract are not included. These include, for example, the costs for a residual debt insurance. To always get the best on interest costs, you should definitely use a loan comparison. What this can achieve is shown in the following example calculation:

Table 3: Savings potential through comparing different small loans

As you can easily see, the savings potential by choosing a low-interest small loan is quite attractive. In the example above you can save over 200 euros in interest over two years. We help you with the loan comparison and together find the small loan that best suits you!

2. Optimize the term

The term of a loan fundamentally affects two important quantities:

• Repayment installment: The longer the term, the smaller the monthly installment. This makes sense because the loan amount is spread over a longer period.
• Interest costs: Unfortunately, a longer term also causes total interest costs to rise because you borrow the money for a longer period and thus pay interest for longer.

With regard to optimizing the term, we therefore recommend that you always choose the shortest term possible. However, you should always keep your financial possibilities in mind. Think in advance about the maximum amount you can repay monthly and set the desired term accordingly.

3. Other important features

In addition to low interest rates and an optimized term, you should also pay attention to other performance features when looking for a suitable small loan. However, these are not always important and depend on your individual circumstances and the intended use of your small loan. The following are explained in more detail:

• Free special repayments: When you take out a small loan, the repayment is usually fixed. If you have the opportunity to make repayments beyond the agreed amortization, these are generally referred to as special repayments. Normally such special repayments or early repayment lead to a prepayment penalty (up to 1% of the prematurely repaid amount). Today, however, more and more providers offer free special repayments that allow you to reduce your interest costs by making additional repayments. This is of course only interesting if you actually have the corresponding funds.

• Free installment pause: Whether a small loan or a larger installment loan – basically all loans are a fixed payment obligation in the future. Unfortunately the future cannot be planned completely, so financial bottlenecks can always occur. In such a case an installment pause helps to relieve the financial burden for one month. Some small loan providers offer loans with a corresponding installment pause (once a year).
• Fully digital application process: Do you need the money from a small loan particularly quickly? Today there are providers that enable a fully digital application for a small loan. You do not have to send the loan agreement and documents by post, but can upload everything online to the bank and sign the loan agreement using a qualified digital signature. In the ideal case you will receive your money already after 24 hours.

A closer look at the services and terms of individual small loans is therefore worthwhile. For you it is most important to formulate your specific needs in relation to taking out the loan in advance. Based on this information we can work with you to find the small loan that is perfectly tailored to you.

Apply for a small loan – preparation and process

If you have decided on a specific small loan, the application phase begins. The main questions are whether a loan can be granted at all and which documents you need to submit.

What requirements must I meet for a small loan?

The requirements for a small loan usually differ little from those for conventional installment loans. In addition to legal requirements such as a permanent residence in Germany and being of legal age, it is mainly about whether you are able to repay a loan in accordance with the agreement. For this purpose, two requirements usually have to be met:

1. Sufficient income
For successful loan repayment you need a secure income of sufficient amount. For this reason, it is important that you are in a permanent employment relationship outside the probationary period. Furthermore, your income should be well above the garnishment exemption limits (as of 2018: 1,139.99 euros). Of course the number of people in your household and your expenses also play an important role. However, most banks use their own statistical models to calculate expenses and determine based on your income whether a loan can be granted from a financial perspective.

2. Clean SCHUFA information

A conventional small loan also requires a clean SCHUFA information. Negative entries are an exclusion criterion for many banks when granting a loan. If you have a negative SCHUFA entry due to unpaid bills or a declaration in lieu of an oath, a small loan without SCHUFA can help.

What documents are needed for a small loan?

Because small loans generally involve lower loan amounts, the documentary requirements are often not quite as extensive. Usually the following suffice:\

• Payslips for the last two months\
• Proof of permanent employment (e.g. employment contract)
  In individual cases a bank may also want to see some bank statements.

  

Applying for a small loan – this is how it works

To receive the loan amount of a small loan, you must of course apply for it first. The following steps are usually required:

1. Inquiry with MAXDA
So that we can find the perfect small loan for you, we first need some information about you and contact options. In addition, data on your professional and income situation are important. Based on these data and your desired specifications for the required small loan, our experts can search for offers with the best possible terms for you through a comprehensive loan comparison.

2. Application with the selected bank
If we have found the most favorable small loan with the desired features for you, the next step is the online application with your provided data. We send this to the bank and receive an immediate response as to whether a loan can be granted.
3. Sign the loan agreement and submit documents
Next, the loan agreement sent by the bank (often by email) must be signed. In addition, the documents mentioned above must be attached. These serve to substantiate your statements about your income and asset situation.

4. Complete the identification procedure
Since there is no direct contact between the bank as lender and you as borrower with an online small loan, identification of your person is required. Today there are two common procedures for this:

• Postident procedure: You receive a voucher from the bank and go to the nearest post office with it and your ID card or passport. There a staff member completes the Postident procedure.
• Videoident procedure: You receive a video call from a Post employee and must hold your ID card next to you in the camera. In this way you can also prove your identity. At the end you receive a PIN by SMS with which you confirm the video chat.

5. Receive and use the loan amount

You can usually expect to receive the loan amount within a few days. It is credited to your checking account and is then at your free disposal.

Is a small loan available without SCHUFA?

If your SCHUFA information contains a negative entry, it is often very difficult or impossible to obtain a conventional small loan. Fortunately, we also work with specialized lenders who enable a small loan without SCHUFA.

What requirements must I meet for a small loan without SCHUFA?

There is a lot of misinformation in the field of loans without SCHUFA, often spread by dubious providers. Contrary to some advertising claims, you cannot get a small loan without SCHUFA if your overall creditworthiness is poor. Such a loan only has the special feature that lenders waive a SCHUFA check or that it is not an important criterion for the loan decision. You still have to meet certain requirements for a SCHUFA-free small loan:

• Regular and secure income (even more important)
• Residence in Germany (a very common condition)
• Legal age
• Permanent employment outside the probationary period

If you have a stable and regular income above the garnishment exemption limits, the chances of getting a small loan without SCHUFA are quite good. Contact us! We look forward to finding your perfect SCHUFA-free small loan together.

Who is a small loan without SCHUFA suitable for?

Since banks generally have a poorer information base on your creditworthiness with a SCHUFA-free loan, such loans are considered riskier. This usually results in higher interest rates compared to conventional small loans. For this reason you should only consider this alternative if you really need money urgently. In this case a small loan without SCHUFA is a viable option that can offer solid terms. There are also two other groups of people for whom such small loans may be suitable:

• You do not want the loan to be reported to SCHUFA and visible to other contracting parties. Taking out such a loan under the radar can make sense to avoid worsening the terms of other contracts.
• You generally do not want to pass data on to credit agencies and thus lead a more independent life.

In all these cases we help you find the small loan that fully matches your wishes and needs.

Frequently asked questions about small loans

Below we answer some questions that are repeatedly asked about small loans:

Is a small loan possible during unemployment or while receiving Hartz IV?

People who are unemployed or receiving Hartz IV often quickly face the problem of needing money. Unfortunately, basic security according to Hartz IV is not considered countable income and therefore cannot practically be garnished. Without your own income as security, a loan approval is usually not possible. However, there is the option of obtaining a loan with a second borrower or a guarantor. This person must, however, have their own income of sufficient amount.

Can a small loan be applied for with a guarantee?

In principle, it is possible to apply for a small loan with a guarantor. Due to the low loan amounts this rarely happens, but it is not excluded. A guarantor must, however, be willing to provide a joint and several surety. This means the guarantor waives the objection of prior enforcement according to §773 Abs. 1 Nr. 1 BGB and cannot insist that the bank first sue the borrower. The lender therefore has the option of holding the guarantor liable immediately in case of payment difficulties.

Can I get a small loan as a student?

Although students often find it difficult to obtain a loan, it looks somewhat different for small loans. However, it depends on the individual framework conditions:

• Loan amount: Very low loan amounts of 500 to 1,000 euros are likely easier to obtain than a small loan of 3,000 to 5,000 euros.
• Income level: Many students receive support from their parents and have a student job themselves. If this adds up sufficiently, a small loan with a low loan amount could be possible.
• Bank scoring: Individual banks have different scoring systems. Depending on the risk assessment, you may get a small loan from one bank while another rejects you.

If you want to be sure as a student when taking out a loan, you should take a second borrower on board. If your parents take out the loan with you, there should be no major problems given appropriate creditworthiness.

Feel free to get information with our loan calculator

Is a small loan possible during personal bankruptcy?

If you are in personal bankruptcy and have applied for debt discharge, taking out a loan is highly problematic. On the one hand, creditworthiness is usually insufficient for a loan so banks almost always reject the loan. On the other hand, taking out another loan could anger your creditors. Warning: Taking out a loan can under certain circumstances jeopardize your personal bankruptcy proceedings. According to §290 Abs. Nr. 4 Insolvenzordnung, creditors can apply for denial of debt discharge if the debtor incurs unreasonable liabilities.

Is installment purchase an alternative to the small loan?

Basically a installment purchase for consumer goods is not much different from a small loan. By using an installment purchase you as a borrower limit yourself in your choices:

• The financing must be carried out with the retailer's financing partner
• No possibility to compare different lenders
• Possibly worse terms than from a bank

If you are interested in financing the purchase of a consumer good, it is advisable to compare various loan offers beforehand and compare them with the installment purchase offer. This way you find out where you get better terms.

What is the difference between a small loan and a mini loan?

At first glance it is not easy to distinguish a small loan from a mini loan since both involve low loan amounts. But there are differences, because mini loans can already be granted for sums of 300–600 euros. In addition the loans differ in other points:

• Term: Mini loans have much shorter terms of 30–180 days and are therefore sometimes referred to as short-term loans.
• Purpose: A mini loan is actually only financing for very short-term bridging of small bottlenecks. A small loan can also be used to finance purchases since terms of 1–2 years can be agreed.
• Requirements: Since the loan amount for a short-term loan is significantly lower, the granting criteria for mini loans are often somewhat looser. New customers can initially only access very small loan amounts, but this increases if they demonstrate their payment behavior even despite a negative SCHUFA entry.

Conclusion: Find an affordable small loan today!

Small loans are a practical way to overcome smaller hurdles in everyday life. Whether it's an important car repair, replacement of an essential household appliance, or financing an important event such as a wedding or a vacation – a suitable small loan makes it possible. With our loan comparison we help you find a small loan that meets your needs and is also very affordable. Contact us today and start saving a lot of money on your loan now! Also use the Maxda loan calculator!