For many people who have overdrawn their overdrafts or have to pay other debts, it may make sense to take out a loan to reduce debt. Such a loan is available both at your own house bank and at many other German branch or direct banks. Before taking concrete steps to borrow, it would be very important to compare the conditions of the banks with one another and, in particular, to pay attention to whether the loan can really reduce debt or whether the personal situation does not get any worse.
Compare loan offers
If you want to take out a loan to reduce debt, you should find out exactly how much money you need to reduce your debt or pay off another loan. In addition, it could make sense to combine several loans and only pay one repayment installment to one place.
When comparing loans, you should not only pay attention to the length of the term, the possible loan amounts and the amount of the monthly loan installments, but also the borrowing rate and the annual percentage rate. If the annual percentage rate is very low, in most cases a loan repayment or a loan to reduce debt is worthwhile.
Requirements for borrowing
A debt reduction loan can only be taken out if the relevant conditions are met. This includes not only regular income, but also positive Credit Bureau information. If negative Credit Bureau entries exist due to existing debts, it would be very difficult to borrow. If the income is sufficiently high, the person in question could try to get a loan without Credit Bureau from abroad. Such loans are only granted to employees or civil servants and not to the self-employed or freelancers. Statements to the contrary are usually dubious and should only be viewed with extreme caution.
Alternatives to a loan
A debt reduction loan is not always the best solution. This applies in particular if there are several unpaid invoices, reminders or dunning notices. In any case, it would be better to pay the bills and only then think about a new loan. It becomes very difficult if there are already several enforcement orders. If the debtor is permanently unable to settle all outstanding invoice amounts, he may face further coercive measures, which can range from the attachment of wages, salaries or property, to affidavits or private insolvency. The debtor should take countermeasures in good time to prevent this from happening. It would be very important to speak openly with the creditors and to strive for a friendly solution. Those who do not see themselves in the position to do so should seek advice from a state-recognized debtor.