Taking out loans for self-employed persons without collateral at German banks is rather difficult due to the precarious preconditions of the borrower. Collateral is an integral part of the international credit system, because it protects the bank against a default of the borrower, and they count in advance to assess its credit rating.
The self-employed have inherently a very uncertain and fluctuating financial situation, because the company’s success can be reduced at any time, as well as the order situation of freelancers. As a result, it is very difficult for the credit institution to calculate with a fixed credit rating and a corresponding income, but must try to find an average of past revenues from self-employment.
At the same time, the bank must always bear in mind the risk that the order situation may deteriorate at any time and thus, in direct reverse terms, also reduce the income of the self-employed. Therefore, self-employed loans without collateral are difficult to obtain, since collateral brought in, aside from their own receipts and supporting documents, could be used to repay the loan in that particular case.
Popular collateral that is put into loans are for example used guarantors or the vehicle registration, which is stored at the bank for the duration of the loan. In the latter case, the borrower could, of course, continue to dispose of his car, the vehicle registration he gets back after full repayment of the loan.
Without collateral also no bank loan
A bank loan is always bound to collateral of various kinds. On the other hand, this is the case for private loans, where loans are generally made by people from the friendly or related circle, which is why this loan is less linked to the creditworthiness of the borrower than to the individual relationship.
Therefore, a credit at a private level is always associated with a good relationship, then loans for the self-employed without collateral are also possible here. Alternatively, there are portals of private credit, in which then may need to prove a rough measure of their own creditworthiness, as the lenders spend the loan in this case to achieve a return on interest rates.
These private loans among strangers are often associated with higher interest rates, as the loan is of course provided by the private assets of the lender, which is why he wants to secure the best possible lending. Under certain circumstances, the money can also be earned on a part-time job, if it is not needed immediately and temporally the possibility exists. Ultimately, a loan will be entirely possible without collateral but only in a private environment.