Not everyone is entitled to a credit line. First, you must be of legal age, secondly, have a fixed income and, third, have no negative features in the credit bureau. Thus, unfortunately, almost all self-employed, because their income is usually not regular.
What is a credit line and is it useful?
A credit line can not be compared to a classic installment loan. It is a special form in the area of loans. One of the reasons is that you do not have to repay it regularly at agreed rates.
The framework is agreed upon by agreement between customer and bank. In this case, the bank offers an overdraft in credit form with the disposition credit, which, however, corresponds more to a line, a limited possibility and is not linked to a clear repayment agreement. The bank is secured, because there is the disposition credit only in connection with a checking account at the respective bank. The customer does not have to use this framework, but can quickly help out in a financial emergency. Furthermore, the customer can usually use the credit line without a time limit.
A really practical thing, if you use the Dispo as a short-term loan for interim financing.
But reality often looks different
That is only one side of the coin. The credit line is partly a very convenient way to help out or even live something about the actual circumstances, as it still gives some financial backbone like a backdoor, which may then lead to one or the other purchase, so the next Salary then just not enough to pay him off completely. So it can happen that many customers have to live in their dispensers for decades because the framework may have been too high. And that in turn is not very economical, the overdraft interest move but about 4.5 to 15 percent, depending on the region and bank. That makes the, at first glance, practical disposition one of the most expensive loans ever. Especially if it takes years to complete.
Dispo and responsibility
Anyone who gets a Dispo provided should think carefully whether he really wants to use it or should. Often it is not necessary to make an acquisition immediately, you could also save it. Of course it is different with an urgent repair. As it may already be, that it should be done and settled immediately, otherwise you have debts at the workshop or just no car, if the car was broken. This can be a problem especially for small business owners and young start-ups, because of course, such costs can not be planned and a vehicle can be business-critical.
But the risk of permanent debts at the bank through the Dispo is quite large, because it is also very expensive.
But as already said, self-employed or small business owners are usually not entitled to a credit line. But what can you do to finance yourself quickly?
Is there an alternative?
Yes, there are even some. You could apply for a short term loan …
- Your parents ask
- Ask friends
- ask anyone
- go to the pawn shop
- Play the lottery (not really a recommendation, but a possibility)
- work more
- avail yourself of an online short-term loan
The latter offers in the case of BankFit even a cheaper alternative than most Dispos, if possible, because the money is not indefinite and the interest is much lower because it is not incurred for the quarter or year, but only for 30 days. This can help to stay flexible and avoid over-indebtedness. Because of the short maturities and the very small amounts, it is also possible to get a BankFit short-term loan with average credit bureau values, because here the credit conditions are weighted differently.
A little tip in the end
It would be best if you did not need to borrow money at all. But if you have to, be sure to know the cheapest way that best suits your situation. And pay back a loan as punctually as possible.