Trainees who need a loan often have the problem of low credit quality. A circumstance that is due to the training allowances, which are usually much poorer than salaries or wages of full-time employees. Nonetheless, this compensation is a regular income. It now depends on what kind of funding for trainees and in what amount this is needed.
Financing for apprentices at the bank
Those who are still in education should not expect too much from banks as far as the amount of the loan is concerned. Although there is a regular income, but not in an amount that would allow the inclusion of a larger installment loan. But if larger sums are needed, it will hardly be possible without the help of third parties to get funding for trainees.
This help is available in the form of guarantors and co-applicants. Often these are persons from the close circle of friends or relatives, because a certain basis of trust is already required. A guarantor at the bank is just that the loan is repaid on time and in full.
If the applicant defaults on its debt service, the regular payment of interest and principal, the guarantor must pay for it and accept the payments in whole or in part until the borrower can repay it himself or the loan is fully repaid.
The same applies to the co-applicant. However, this ensures from the beginning that the payments are made and not fail. Thus, the co-applicant is also legally liable as of the conclusion of the contract.
Both the guarantor and the co-applicants must have the prerequisites that they have no negative credit bureau entries. In addition, sufficient and regular income must be available. If this income is then generated from self-employment and can be provided for this pay or salary, the financing for trainees is in principle no more obstacles.
If only small sums are needed, banks can talk to one another without the involvement of third parties. Often, apprentices are given disposition credits, which they can then freely dispose of. The amount of such a loan is based on the income of the trainee.
As a rule, two to three times the monthly salary is used to determine the credit line. Up to this line then the current account can be led with the appropriate bank in the desired one. However, the borrower should be aware that this is a relatively expensive loan option. The loan interest rates are often 3 to 4 percentage points higher than those of a normal installment loan.
However, the benefits of a credit line can not be denied: it can be used at any time and also be repaid. So there are no prepayment penalties, as they are common, for example, with installment loans.
Interest is only the amount actually used and the exact day. In the context of financing for apprentices, it can therefore do no harm to at least keep open the option for this loan, because there is no compulsion to take the loan immediately.
Traders also grant financing for apprentices via the trade credit. However, this is linked to the acquisition of a specific product. The collateral is provided through retention of title, which normally does not require proof of income. Nor is a credit bureauauskunft obtained. However, the borrower should endeavor to repay the loan early as the trader has the right to reclaim the goods from the buyer in the event of default.