No credit without security.
That’s how it works out of banking circles. But the “bank loan” scolds this rule lags or designates at least one exception. Clearly, credit does not mean that the bank signs an unsuccessful request, in which the customer only needs to enter the desired amount. Blank means “credit without security”.
To use the term clear credit, it is not absolutely necessary to speak of a completely unsecured loan. Even a loan with an unsecured portion is in the broadest sense a blank loan, albeit only with an unsecured blank portion. Secured loans without collateral that can be valued by bankers are also unsecured loans, whereby bonds, negative declarations and wage and salary assignments are classified as unremarkable. Whatever a blank loan may be, the debtor’s impeccable creditworthiness is indispensable for a commitment.
Why blank credit?
Since the blank loan requires a high personal rating, the customer would also get a much cheaper, secured loan. But especially in the business world, in companies and medium-sized enterprises, which are still in the costly development phase or would like to expand, collateral Aces are in the forefront of the management. If the bank provides unsecured unsecured loans, collateral can be saved for other loans.
In the area of corporate banking, blank loans are interesting for financing current assets. However, then often the entire payment transactions must be handled via this account. In this way, the bank uses the opportunity to keep an eye on the customer. If the credit becomes a risk, the bank can terminate it at any time. The repayment of the loan must then take place immediately.
For a blank loan, the company must be able to fulfill the following requirements:
– A good equity ratio – A solid financial structure – A good to excellent earnings position – A secured capital base combined with a good asset position.
But even with these conditions, it is not easy for companies to get a blank credit. An excellent rating is indispensable. This is not created by any third party, but the bank makes its own image of the customer. If the previous business relationship has proved to be reliable, the unsecured loan will be within reach. Nevertheless, it is also important for a managing director to know the criteria by which the bank assesses its GmbH. Who knows these criteria and can adjust to it, has the better cards. It is therefore advisable for senior executives, who love a blank loan, to get in touch with the bank and to discuss earlier rating analyzes before applying for it. Any weak points can be eliminated in this way.
The blank credit is not limited to the business world alone.
Private customers can also use it. Installment loans, overdrafts (account overdrafts), leases and credit card limits are common examples of blank loans. Construction loan are also often unsecured loans. These are regulated in 7 para. 4 of the Building Society Act. Home savings loans up to a maximum of 10,000 euros or interim loans up to 5,000 euros can be considered as a blank loan, because they do not necessarily have to be secured by mortgage due to the low amount. Even with loans issued as a negative loan between 10,000 euros and 15,000 euros is waived on a mortgage. However, the borrower must give a negative declaration for this.
Unsecured loans are usually short-term loans and rarely exceed one year. A repayment modality is not agreed. The loan is either repaid on a regular basis or repaid at maturity at the end of the term. The interest rates are noticeably higher than for secured loans because the bank charges a risk premium. Unless the client’s credit rating is so good as to consider the use of a preferential rate of interest.
Tip: Make sure that the loan agreement confirms that it is a clear loan, otherwise collateral may be requested.