It is not always easy to keep your checking account in the black. Even if the income is high and regular, there are always unpredictable expenses that have to be paid. Be it a larger bill for a repair, an important new purchase or just a wish that has been cherished for a long time and is now finally to be put into practice.
If your own credit is not sufficient for this, you can use the overdraft facility. It is directly linked to the checking account as an on-demand credit and enables spontaneous purchases that go beyond your own budget without the need for a separate loan.
The disadvantages of the overdraft facility
Unfortunately, this spontaneous availability of money also has a major disadvantage. The banks and savings banks let the use of the overdraft facility be paid very princely. The average effective interest rate for this is 11 to 12 percent. And this interest rate must be paid every month on the amount used from the overdraft facility. No wonder that many consumers find it difficult to compensate for the overdraft facility, since all money is “eaten up” by the interest. A credit in spite of excessive overdraft facilities could therefore be a good choice to get out of the overdraft facility and to steer financial matters back in a regulated manner.
What are the options for a loan despite excessive overdraft facilities?
It is always important to react quickly in order to keep the costs for the overdraft facility and its overdraft as low as possible. It is also important not to let the overdraft accumulate negatively in Credit Bureau, as this would make it very difficult to take out a loan despite overdrafting.
The easiest way to compensate is to take out an installment loan. It is not earmarked and can therefore be easily adapted. In addition, the interest rate is very low and well below the overdraft interest rate.
A consumer loan or other special loans, however, are not worthwhile. They are all earmarked and therefore not suitable for balancing the overdraft facility. In many cases, they also bring with them very firm repayment requirements that can only be adjusted to a limited extent to the situation of the borrower.
Where should the loan be taken despite excessive overdraft?
The “where” around taking out a loan despite an overdraft facility can only be clarified when it is known what traces the overdraft has already left. In general, however, the golden rule is that a loan despite excessive overdraft should never be taken out with the bank that provides the overdraft facility. She knows about the concerns and needs of the loan seeker and could take advantage of them. Mostly in the form of a higher effective interest rate, since the bank should not have an increased interest in the expensive overdraft facility being replaced. After all, the bank earns significantly more money from it than from a cheap installment loan.
Otherwise, you have to look at the requirements for taking out a loan despite excessive overdraft facilities. If the overdraft facility has not yet made itself felt in the Credit Bureau and is otherwise free of negative entries, a simple installment loan can be used, which can be applied for by means of a comparison from almost all banks. With a good credit rating, offers can be found that offer an effective interest rate of less than 3 percent. The amount of money that is really needed should always be included. If there are other financial construction sites in addition to the overdraft facility that need to be processed, these should also be included in the loan amount. The goal must always be that in the end there is only one creditor left, whom you can pay off with the help of small, constant monthly installments.
However, if the overdraft facility has already left its mark on the Credit Bureau, taking out a loan can be a little more difficult despite the overdraft facility. In such a case, we recommend adding a second borrower who can provide a simple installment loan with a good credit rating. If this is not possible, the loan from abroad or the personal loan remains. However, since both loan variants are accompanied by quite high interest rates, it can happen that rescheduling, i.e. replacing the overdraft facility with another loan, is not worthwhile. It is therefore necessary to look and calculate exactly what really makes sense in the end.