Loan without payment in installments
The normal installment loans or consumer loans are usually not available as loans without installment payments. Certain exceptions are common practice in retail.
When a loan is taken out, the loan contract always includes the monthly installment agreement. An installment loan runs for 12 to 120 months, depending on customer requirements. The monthly installments are then debited from the borrower’s account by direct debit on the specified date.
In order to boost the sale of consumer goods, there is occasionally the possibility in retail to take out a loan and for now, the emphasis here is on “for the time being” not to pay any installments. The customers take out a loan for the purchase of the goods and start paying the installments at a later time. This practice can be found particularly in the mail order business, but also when buying furniture and electronic items. Such campaigns, in which customers are offered to buy today and only start paying in installments at the beginning of the year, start in September. This creates additional financial freedom for borrowers, which are not free, but cost interest.
Loan without payment in installments for car financing
The car banks also offer such financing models from time to time. Customers buy a car on day X and then pay no installments for a whole year, even though they use the car. Payment in installments will then only start 12 months later. That may make sense, but it is usually not because a loan that is not repaid automatically becomes more expensive.
The overdraft facility
In September 2010, the Stiftung Warentest confirmed that interest rates for overdraft facilities across Germany are far too high. Nevertheless, every sixth German consumer lives constantly from the overdraft facility. This is a consumer loan in the broadest sense, the most expensive one that does not require payment in installments.
The overdraft facility is part of the checking account and is fully or partially cleared if salary or other payments are received in the account. Consumers who use the overdraft facility constantly should consider replacing it with an installment loan in order to save costs. A loan without payment in installments like the overdraft facility is far too expensive in the long run.