It’s a less than comfortable situation: your own account is very convincing. The overdraft facility is at its ready, but you still need a larger amount of money, for example to move, to start a new job elsewhere or to go on a trip. In this case, a loan must help. However, despite this overdraft facility, the banks often do not cooperate with reference to the overdrawn account.
Credit despite overdraft: the problems
The first problem that the bank will complain about is reduced creditworthiness. The overdraft facility is a loan and for that reason alone deteriorates your own credit rating entry and thus your own creditworthiness. The dangerous thing about a overdraft facility, however, is that its interest rates are much higher than with a normal loan. This further worsens creditworthiness. In addition, the bank looks very closely at whether the borrower is making serious efforts to reduce the overdraft or live with it. Because this also says a lot about whether the borrower is even willing to repay his debts.
Credit despite overdraft facility: the debt rescheduling option
The easiest way to convince a bank to accept an installment loan despite overdraft is the debt restructuring option. This means that the financial institution is suggested to take out a loan that is large enough to meet its own needs and reduce the overdraft facility to zero. As a result, the right to overdraft is restricted or deleted entirely. The advantage for the bank is that they get a binding loan agreement that guarantees them repayments of the loan. The borrower can also benefit from this, since in this way he not only gets his desired loan, but may even improve his creditworthiness, since the new loan has significantly lower interest rates than the overdraft facility, which reduces the burden. However, this is also the reason why banks could refuse to do so. You earn much more from the overdraft facility than from the installment loan.
Credit despite overdraft facility: the variant of a foreign bank
If the bank rejects the installment loan in addition to the overdraft facility or in the form of debt restructuring, this means that the credit rating entry is not sufficient to obtain an additional loan. It is therefore important for the borrower to get an installment loan despite overdraft without credit rating. To do this, he can either present a guarantor to the bank who, if necessary, stands for the repayment or switch to a foreign bank. Internet banks in particular often offer loans without credit rating. This means that they do not consult this entry as a decision criterion before making a credit decision, so they know nothing about the overdraft facility and do not report the loan to the protection association for general credit protection, which is why the creditworthiness in the country does not decrease further.
Comparison portals on the Internet, as well as relevant testimonials from previous customers, help to find exactly the installment loan you were looking for, despite overdraft and no credit rating from an Internet bank. Internet banks can afford to make such offers because they do not have a branch in the country. The money saved in this way can flow directly into particularly good loan offers. Interest rates are less high than is often claimed.