Loans despite debt are in many cases the saving option in financial emergencies. Basically speaking, from a legal point of view and from the perspective of the banks, there is nothing to be said against taking out a loan if the applicant is already in debt. Depending on at least a good credit rating, each bank grants loans despite debt. In addition, consumers need to take some things into account when borrowing.
Not welcome at all
Consumers who take out new loans despite debts to meet old payment obligations are not welcome guests by credit institutions. Especially not if the new loan significantly exceeds the amount of the loan already received. The Credit Bureau information shows the attitude to credit transactions very clearly. With the consent of the applicant, banks have access to their Credit Bureau file and can therefore understand exactly which loans have been used by the customer.
Of course, the bank asks for the intended purpose. If it turns out that this is a kind of loan repayment in the distant sense, the bank usually offers alternatives, such as debt restructuring. This option is usually accompanied by a reduction in the monthly charge and a lower interest rate.
Object oriented loans
The allocation of pure money is particularly difficult if the debtor already has payment obligations. This is due to the fact that the credit institution has to factor in a significantly higher risk of default with a “scratched” credit rating. On the other hand, it is easier to obtain new loans that, despite debt, provide for the financing of a car or other object value as a purpose.
Should the lender be able to track a failure of the monthly installment due several times, he can have the property acquired with the loan pledged to repay it. The Credit Bureau information is less important for this type of loan than the creditworthiness of the applicant. As a standard, a bank determines creditworthiness when it receives a credit request by submitting proof of income.
Debt is always a bad alternative
The danger is extremely high that the debtor will slide even deeper into the debt trap and ultimately suffer capital collateral damage. At this point it should be mentioned that Credit Bureau is not only a protection for banks, but also a security facility for borrowers.
By law, in the event that an application is rejected, this denial of funding should under no circumstances be subjectively assessed. The tendency or risk of over-indebtedness is so high in today’s society that, for example, the security device described can fully justify its existence.