Young people have both feet in life these days. They are dynamic and confident. If you think of the youth of the past, there is a significant difference to the youth of today. In the past, many young people started training at 15/16, which usually lasted three years and then went into work. Today almost every young person first gets his Abitur and then starts studying. A few years pass before the first money is earned. Nevertheless, young people also have to apply for a loan for young people.
Although there is hardly any income, today’s young people want their first home, a first car. But there are young people who are already thinking about retirement provision in the future. A commendable thought when you look at the pension of ordinary people. If a loan is needed for young people, banks do the same as for loan seekers who have little or no income.
A loan for young people needs to be secured. If there is no income, the young person must be able to name a guarantor. Think of the parents or grandparents as guarantors. If the borrower can then no longer pay the installments, the guarantor must step in and continue to pay the installments.
Young people who think of the future as a precaution actually want to lay the foundation for it now. There is the dream of owning a home that would be intended as a later retirement pension. But the young person who has just completed his education and is in professional life does not yet receive income like an older worker. Many people lack capital, so that a loan for young people is in the focus.
But young people who are still in training also need a loan. Banks have taken a closer look at this target group, as they are tomorrow’s future customers. Not all parents can help their children financially. There is a loan for young people from the house banks where the interest rate is acceptable.
Even those who are not yet of legal age do not have to do without a loan. In this case too, just as with insufficient income, a guarantor can secure the loan. The latter must then continue to pay the loan if the borrower is no longer able to do so. Most banks will not say no to a loan for young people. The loan will be based on the training period.
There is also the possibility that parents take out a loan for their offspring and pay for the necessary things. But to what extent the parents can do that, everyone has to decide for themselves.
However, no one can guarantee that the trainee will be taken on in a permanent job after completing his training. Because of this, the loan amount will be more low, since the loan has to be paid during the training period. Young people can go to their parents’ house bank for their credit or look around the internet. Young people in particular will take the latter route.
This is a good thing, because experience has shown that banks on the Internet are cheaper than branch banks.
It is also important for young people to draw up a budget. If, for example, he still lives at home and does not have to hand in any money there and he has about 1,000 USD as training allowance, a loan could be realized for young people, but only if the trainee is of legal age. If he is under the age of 18, legal guardians must also sign.
If the loan for a car is taken out, the rates should be adjusted to the income. After all, a car also needs to be maintained. If the entire remuneration goes towards the installment, there is a high probability of a loan default.
The student also has claims and little money is available. If a loan is taken up too high, a loan default can also occur. Then the young person already has a negative entry in his Credit Bureau.
Since the financial situation of a trainee or student is often still very vague, a loan should be taken carefully. Banks have already prepared for this and in most cases only approve a four-figure loan. The loan for young people to banks is intended for people aged 18 to 25. The terms can be chosen between 12 and 84 months. Even if a loan is approved, the young person should always remember that they may have to pay off the loan for a long time.
In order to prevent over-indebtedness, the loans usually amount to up to 5,000 USD. The loan remains manageable, but the installments still have to be paid. One thing young people shouldn’t do is use the overdraft facility that some banks offer. Especially the young person who is not yet able to handle financial matters properly can then become a debt trap. It is also very expensive.
The loan application
If the young person already has a permanent employment contract, he may be able to take out a higher loan amount. Nevertheless, the loan amount should always be adjusted to the income. Many young people are already dealing with a negative Credit Bureau because many cell phone bills can no longer be paid or because there were loan defaults.
Proof of the creditworthiness of the young person is the employment contract or proof of salary. The bank will also draw up a budget to see if installments can be paid at all. If there is financial scope left, it could be used for the installment. However, the entire remaining amount should not be used. Young people should always learn to put something aside and save.
Especially when the first wage comes or the first training allowance, young people cannot handle it properly and spend everything. Then parents or other caregivers should explain how to use your money wisely. The budget, in particular, smiled at by many, has already served well.
Before applying for a loan, a loan comparison should also be used for young people. The house bank is not always cheaper than an online bank.