Alternative to Traditional Financing

by : Mark Lauterwein



The internet: no other medium permits such a wide range of products to be offered for comparison so easily. In recent years the potential of the Internet has been increasingly exploited by the German credit sector so it is hardly surprising that so called Online Kredit is becoming a really viable alternative to the conventional loan. Now the whole business can be sorted out without having to leave the house.

Once upon a time applying for a loan involved the customer visiting the bank to be received by a smartly attired advisor who, after offering coffee, would present his bank's range of standard financial products. Traditional banks remain as conservative as ever in the matter of granting Kredit. Indeed all banks are clearly concerned with minimising the risk of financial loss when it comes to the crunch decision of whether to offer credit.

This is because high street finance houses require a stable, regular income above all in order to cover their considerable overheads (staff and buildings). For the borrower, this normally means that the weight of protecting the bank's assets falls to him through higher interest on the repayments.

In contrast to these traditional Kredit providers those offering online Kredit have significantly lower overheads. For example there are no expensive commissions to be awarded to financial advisors. Indeed the personnel costs in general are much lower since practically every step of the application process can be completed online and that is also much quicker. In most cases these savings are passed directly on to the customer.

Furthermore a number of online Banks offer a so called Kredit without Schufa. This means that those who would typically be unable to have a loan application accepted because of a poor Schufa ranking have an opportunity to realise their financial ambitions online. Of course, it can happen that an online provider also rejects an application. However it is always easier to make another online application that to wend one's way into the next high street bank.