Almost half of all households take up the offer of zero-percent financing for consumer and luxury goods. Unfortunately wrong planning and overestimation of the own financial strength lead on this way frequently into the debt trap. This can be avoided by wise calculation and realistic planning.
Check credit application with the help of a budget
A budget shows what monthly income can be safely expected and what expenses will be met from it. What remains below the bottom line of the plan is available for the repayment of the installment loan. But the calculated amount should include enough planning freedom for unforeseen expenses. Only then is it certain that the monthly installment can be paid on time.
Interest is charged in any case. These increase the installment sum and finally also the purchase price of financed consumer goods. Sensible is the planning of the credit application thus also regarding the alleged bargain price. Some traders earn more by granting credit for their goods than on the purchase price itself.
Risks of consumer loans
The "first time" with the installment purchase offers the mad chance to afford despite missing savings something. However, the massive financing offers for vehicles, furnishings or luxury goods are extremely tempting. However, these deals are not always as cheap as advertised. It is possible, for example, that the installment payment will take longer than the acquired item will function.
So consumers continue to pay, but must repurchase the item, have it repaired, or do without it. It must also be checked before use whether maintenance or repair costs are due during the period of use and advice. Personal circumstances such as sudden illness, unemployment or other changes in the income situation can also make the monthly payment a hurdle.
Requirements for the commitment to the installment loan for consumer goods
It may sound illogical, but it's realistic when it comes to credit planning: only with enough margin between income and expenses will consumer installment loans not become debt traps. Many providers of such loans are careful with their consumers' financial performance anyway. They require at least these documents before granting a loan:
- Copy of at least two, better three salary slips
- Forgery-proof copy of the bank statements of the last month – here salary receipts, debits and regular expenditures are well recognizable
- Depending on the loan offer, additional documentation on the financial situation or possible collateral
The budget plan mentioned above is also required by many providers of this type of credit to check creditworthiness. Before financing is approved with all these documents, providers check creditworthiness. Information on this can be obtained from Schufa upon request.
Conclusion
An installment loan for consumer goods enables purchases that would actually not be possible with the existing equity at the moment of the offer. However, the relationship between the installment offer and the actual price of the goods should be checked well. Also, the upcoming installment payment better not become a monthly problem for the consumer.