A loan from a private individual differs from conventional loans in that the lender is rather atypical. Because with this type of credit no bank gives a loan, but private individuals.
These personal loans differ in terms of interest rate, lending practice and risk. Below, you'll get important tips – depending on whether you want to make or take a private loan.
FAQ about the personal loan
What is a personal loan?
A personal loan is a loan in which private individuals act as lenders. Unlike loan negotiations with banks or other lenders, loan negotiation and origination is between private individuals. In the case of classic personal loans, persons from the borrower's circle of family or friends act as lenders. With the emergence of the internet, P2P lending has developed, expanding the possibilities of private lending beyond the personal environment.
Who grants a personal loan?
A personal loan is characterized by the fact that the lender is not a bank or other professional lender, but the loan is given by private individuals.
What to look for in a personal loan?
In principle, you should be considered in a loan on the term and the interest rate. Especially when a personal loan is granted in a personal environment, it is not always easy to create clear regulations and conduct real loan negotiations. Personal relationships can suffer from this in the worst case scenario.
Give a personal loan
When granting a personal loan, you are granting a loan to other private individuals. Whether you know the respective borrowers or not, is thereby in principle no matter. Reasons for granting a loan from private are, for example, the support of friends and family.
In addition, if you have unneeded capital, individuals can increase it by making a personal loan on a regular basis. Because thanks to the interest you have after the credit term more money than before.
The frequency
If you are interested in private loans as a lender, you need to pay attention to the frequency of your offers and loans. If you only support friends and family with a personal loan from time to time, this is usually unproblematic. The case is different if you frequently and regularly use intermediaries to find private borrowers.
Because the boundary to commercial lending is fluid. Of course, you must declare all your income on your annual tax return – including the income you receive from the interest on the loan.
If you have a critical clerk at the tax office, it may happen that he finds you a commercial lending. This has then various negative consequences, so that the time of granting an unproblematic loan from private belongs to the past.
Attention!
Note the frequency of your private lending. You must also declare income from loan interest on your annual tax return. The boundary to commercial lending is fluid.
The borrowers
But who comes at all as a borrower for you into consideration? The first thing you can do, of course, is to lend money to individuals around you if you learn that they are in urgent need of financial assistance.
In addition, there are platforms for you, which specialize in the mediation of a personal loan. These platforms will match you with the right borrower – based on your individual needs.
Tip
Due to the possibilities of the Internet, private loans can be made not only in the personal environment. Through emerged P2P platforms, it is possible to give and take private loans that go beyond personal relationships.
Often self-employed people or start-up founders are ideal borrowers – especially for the beginning. These do not always have it easy with conventional banks to grab a loan.
In spite of everything, self-employed people are usually reliable partners who gradually repay the personal loan. Of course, there are also private individuals who do not get a loan because of a bad credit history (Schufa). Then a personal loan is often the last resort – and that's where you come in.
The intermediaries
This is important
If you do not want to give the loan from private to people from your environment, you need an intermediary. Because alone it is difficult to find the right borrower.
P2P platforms convince with a comprehensive offer of different loans, so that there is a suitable personal loan for every need here. Subsequently, various private individuals can borrow money from you.
More tips for lenders on a personal loan
Tip
As a lender of a personal loan, you should consider other tips if you want to successfully give others a personal loan. It is recommended to distribute your capital among different projects. Because despite all reliability, it is always possible that a loan defaults.
But then it would be advantageous if you did not put your capital into a single project. Since you should nevertheless not grant too many loans, you must try to create a balancing act between frequent, commercial lending and diversification of your projects. If you take this into account, you will be able to increase your capital through a loan from a private person.
Borrowing money from private individuals
But it is also quite possible that you are on the other side and need a private loan. If you want to borrow money from private individuals, you need to consider a few things. A popular alternative to the conventional loan from a bank is the personal loan from friends and acquaintances.
Attention!
It is not necessarily easy to accept a loan from friends or family and to negotiate the granting of credit. Not for nothing it is said that with money the friendship stops. The private loan from strangers, for example, as a P2P loan can be an optimal alternative for this.
However, the proverb 'money is the end of friendship' has its justification. So, if you do not want to borrow money from friends or they do not have enough capital, you can also get a personal loan from strangers private individuals. There are different reasons for this.
The reasons for a personal loan
The creditworthiness is not sufficient for a loan from the bank Due to self-employment lacks the security of proof of income Due to unemployment lacks the security of a regular income The risk of default is too high for the bank, so it denies the loan One exceeds the maximum age limit up to which a loan is granted by the bank A bad Schufa ensures that the loan is not granted by the bank
There are different reasons for the necessity of a personal loan. In most cases, individuals do not have the creditworthiness, so banks do not qualify as lenders.
If this is the case and you need money urgently, you have no choice. Then you have to resort to a personal loan. In addition, you benefit from low interest rates.
Because in principle, the interest rates are significantly lower for a personal loan. So if you do not want to pay high interest rates, you can also resort to a private loan on the relevant platforms or from acquaintances. In addition, there are many people who do not want to get into further debt.
This means that no further loans are to be taken out with a bank. Because these are relevant for your creditworthiness and Schufa rating. But if you still need money, then resort to a private loan.
The advantages
If you are interested in a personal loan, you will benefit from various advantages. Basically, the conditions of a loan from private are freely negotiable.
This distinguishes a personal loan from a loan from a bank. Because legal regulations apply there. Due to the flexibility, you often have lower costs with a private loan.
Another advantage is the lack of influence of Schufa. Private loans are not registered with the Schufa, so you should resort to a private loan if you do not want any further debt relevant for the Schufa.
If you want to borrow money, what counts in a private loan is the trust between the lender and you – and not your credit rating in the eyes of Schufa. In addition, you can agree with the lender on the collateral individually. Unlike the bank, much more flexibility is possible with a personal loan.