Loan (credit)

A loan is borrowed money that you pay back in instalments plus interest. In Germany there are different types of loan for different purposes.

The most important types of loan:

1. Instalment loan (consumer loan):

• For a car, furniture, holiday, etc.
• Typical interest: 3–9% (depending on creditworthiness)
• Term: 12–84 months
• Fixed monthly instalment

2. Arranged overdraft (Dispo):

• Overdrawing your current account
• Interest: 10–14% (extremely expensive!)
• Flexible: no fixed instalment, but the MOST EXPENSIVE form of credit

3. Mortgage financing:

• Earmarked for property
• Interest: 3.3–4.2% (2025)
• Term: 15–35 years

4. Credit line (Rahmenkredit):

• Can be drawn flexibly up to a limit
• Interest: 6–9% (much cheaper than an overdraft!)
• The often forgotten alternative to the overdraft

Comparing loans:

• ALWAYS compare the effective interest rate (not the borrowing rate)
• Use comparison portals (Check24, Smava, Verivox)
• "Conditions enquiry" instead of "credit enquiry" – protects your Schufa score
• Interest differences between providers: often 4–6 percentage points for the same loan!

Total volume in Germany: over 234 billion euros in consumer loans – at the same time, 5.56 million people are over-indebted.