How do I fix temporary shortages?
In addition to the unemployed, trainees are the group of customers that banks most often put in the way of lending. In this case, training loans represent an exception. These are available with comparable amounts from a normal installment loan from many banks and even in many places with government subsidies at favorable effective interest rates. Especially students who do not exceed the standard period of study seriously benefit from such offers. If, on the other hand, young people need acute money in their training because the family funds or benefits according to the Vocational Training Promotion Act are not enough, the mini loan for trainees is often the last resort of choice. This is because members of this group of customers cannot normally show a regular income or even collateral.
Short term fees are often referred to as dollar amounts
Most of the time, however, the need is rather acute and relatively low, so that mini loans offer enough scope for trainees. Financing of this spectrum is increasingly not coming from banks, even if there are a few institutions with such loan variants. Two examples are the Fidor Bank, which advertise with the so-called “money emergency call”. A maximum of USD 199 can currently be applied for here with a mini loan of up to two months. The offer does not work with a fixed repayment amount, which provides for a fee of 6.00 USD both for the sum of 100 USD and for the maximum sum of 199 USD. This shows very clearly why the interest rates for mini loan models should be compared exactly. Because the bank works with the mini loan for trainees and other borrowers in view of the remuneration with an effective annual interest rate of at least around 18 percent, but with the lower amount even with an interest rate of 72 percent. In Germany, this type of financing is therefore one of the relatively expensive offers, with some service providers offering similar interest rates.
If you look at the flat fee alone, the application can still be worthwhile if urgent. If only because the bank does not place too high demands on applicants. On the other hand, some conditions that have to be fulfilled here can be mentioned as representative for every mini loan for trainees. These are:
- full legitimation
- the question of creditworthiness by means of a Credit Bureau check
- the individual evaluation of the application (including the income situation)
Checking creditworthiness is inevitable in Germany – no matter what type of financing it is.
A few banks rely on mini loans for trainees
For the sake of completeness, it should be mentioned here that there are other banks such as Nic Bank, which has mini loans for trainees, unemployed people and other customers in its portfolio. The striking difference to mini loans from portals that are not operated by banks: The minimum sums usually start at 500 to 1,000 USD and thus go beyond the amounts that are granted on platforms that are independent of the banking industry. Many mini-financing from providers such as Best Bank, Expresscredit or Nice bank, depending on the format, start with minimum amounts of only 50 or 100 USD, in the maximum (Best Bank) up to 3,000 USD can be given as a mini loan for trainees. Such loan amounts do not exist as mini loans without Credit Bureau from German countries. The hurdles for the award are extremely small.
Far more important:
The range of 50 to a maximum of 1,000 USD is absolutely sufficient for a number of recipients to acutely fill the worst holes in the household budget in difficult times. Students and trainees in particular have sufficient reasons to apply for mini credit. The greater the need, the more carefully you should be prepared for the loan application! As we now see, there are moments in the life of many students when life is quite expensive.
Some triggers for inquiries with banks and credit portals are:
- open bills from gas & electricity provider or mobile phone provider
- Debt to the landlord
- Acquisitions for training (specialist books, tickets for the trip to work, etc.)
- Food expenses
- (Motor vehicle) taxes (if they are paid by the parents themselves and not by them)
- Premiums for various insurance companies
- planned vacations
- Cost of a semester abroad
- Fees for important training measures (which are not paid by the employer)
As with most non-earmarked funding, these are just a few of the many possible arguments that can be used to take out a mini loan. Finally being able to buy clothing again or the annual fee for club membership and many other reasons can also lead to the application for a mini loan for trainees.
Any funding must be properly organized
In general, trainees must be aware that even the smallest loan amounts must be repaid as agreed. After all, this golden rule applies to every loan without exception and therefore also to a mini loan for trainees. The short mini loan terms are advantageous because the endeavor has a foreseeable end in time. As logical as this may sound, it is much more difficult to plan customary loans. If you commit yourself to a financier for several years, you can never say exactly whether the monthly payments will be manageable in a year or two. With micro or mini financing, the end of the term is always in sight. Borrowers usually know that they can meet the repayment requirements for a maximum of six months.
Collateral and guarantees as an opportunity optimizer for mini loans
As already mentioned, the result of the Credit Bureau inquiry (or inquiries from other German credit agencies) can lead to a rejection of the application. In this regard, two options can always improve the position of applicants. Firstly, this is the training salary. Even if some professional groups receive a rather low training allowance, small amounts of credit – as is the case with most mini-loans for trainees – can very well serve as security. Furthermore, fixed-interest collateral such as savings contracts, contracts for old-age provision (keyword: Riester) or other investments can lead to a significant improvement in the situation despite low income. On the other hand, there is the possibility of securing this type of loan in another way. For example, in the case of mini-loans for trainees, borrowers include parents or other people with regular and sufficient income as guarantors or co-applicants in the loan agreement.
Different roles of second borrowers and guarantors
Most loan providers allow two borrowers to apply. It is important to distinguish between a second borrower and a guarantor. Guarantors are liable for possible default, which is why their income and creditworthiness are important for lenders. These two factors also play a role in joint loan requests. However, if a mini loan is paid out to two people, both people usually have access to the money. In this context, the guarantee is, as it were, the security for the credit portals that issue a mini loan for trainees. Guarantors are only obliged to accept the outstanding payments if the first borrower does not meet his payment obligations as agreed. And of course if borrowers consciously accept the default. Ultimately, this can occur in theory. Of course, these are exceptions in which borrowers specifically damage the guarantor.
Because → Ideally, the actual borrower dutifully pays his mini credit loan installments.
In most financing scenarios, the mini loan for trainees is repaid smoothly down to the last loan installment. The basis for such a planned project is without question the precise preparation of the borrowing. As small as the loan amounts are. Apprentices or students cannot afford big leaps in financial terms. And so even small mini loan credit rates of 50 to 100 USD can very well become a burden that borrowers cannot do justice to. It becomes even more difficult when sums in higher three-digit amounts or even over 1,000 USD are required. If the TÜV is pending for the vehicle or the old computer has stopped working, the need can quickly rise to 500 USD and more.