Loan types: an overview of the most common ones

There are many different types of credit and the general term for all is the installment loan. Here, as can be seen from the name, the loan is repaid to the creditor in installments. The interest rate and monthly installments remain the same over the specified term.

Installment loan: the loan with monthly constant installments

Installment loan: the loan with monthly constant installments

It is typical of the ordinary installment loan that the installment is always made up of an interest component and a repayment component. The effective annual interest is calculated on the respective remaining loan amount and thus the remaining debt decreases during the term and the borrower pays less and less interest monthly. The lower interest component is then offset by a higher repayment component. The loan is fully repaid at the end of the term.

Overview of other loan names

Overview of other loan names

There are other names for the installment loan, such as consumer credit, consumer credit or online credit. With the latter, the lending is done online via the Internet and it is usually associated with more favorable terms than, for example, a loan from your own bank. There are also platforms that compare different loans online, for example smava. However, there are also loans with slight differences, which are all classic installment loans:

Instant credit

The processing of the credit request is particularly quick, which means that the money is quickly made available. This is possible because the lender uses an automated process and usually the borrowers receive an acceptance or rejection on the same day.

Credit from private

The difference with a private loan is that the lender is not a financial institution, but one or more private individuals. Such loans are granted by certain platforms that act as intermediaries, for example auxmoney or Lendico.

Officials credit

The civil servant loan is a loan that is usually accompanied by particularly favorable terms and can only be claimed by civil servants. The better conditions are that civil servants are considered to be particularly creditworthy because they have a very secure income.

Auto loans

The car loan is a dedicated loan and most of the time the interest rates are lower than normal because the vehicle serves as security.

Modernization credit

Another dedicated loan that supports the renovation or modernization of apartments. Unlike a real estate loan, it is not entered in the land register.