Credit without a bank: borrow money privately

Are you looking for a loan but don’t want to use a bank? You surely have a good reason for this. Perhaps some banks have already refused to grant a loan to finance a specific job. Perhaps credit requests were rejected without reason or with an indication of insufficient creditworthiness due to minor complications. Or you simply want to prevent the lending from being recorded in your creation file.

There are many reasons for wanting a loan without a bank. Whatever your reason, the possibilities of a loan without a bank are severely limited in Germany. There are no moneylenders. Commercial lending is subject to authorization, and only banks will receive such authorization.

Here we show you some ways to borrow money without a bank. We describe what lenders and borrowers should look out for and where there are possible stumbling blocks.

What is a personal loan?

What is a personal loan?

A personal loan is a loan that is granted by a lender outside of the commercial activity. The lender acts as a private individual. He may run a business or run a business, but lending takes place outside of his business.

Lending is commercial if it is made with the intention of making a profit. In addition, the lending business must be carried out according to plan and have a duration.

These characteristics are sufficient to meet the term “commercial”. The size of lending is not important. If the prerequisites for commercial lending are met, a license under the Banking Act is required, which is regularly only given to credit institutions.

Anyone who grants commercial loans without permission is punishable by law. Sometimes the term “personal loan” is used in a different sense. It does not quite correctly denote consumer loans to private individuals, in contrast to loans that are granted in a business context.

Borrow money from private

Borrow money from private

Those who urgently need money, but the bank adorns themselves, often turn to close relatives or friends. He will often be helped and the desired loan will be granted.

And it is not uncommon for disputes to arise in connection with the processing of personal loans, which often endanger the friendly relationship.

However, the contracting parties can prevent this if a few tips are observed. This is not just about the relationship between the parties, but also about tax issues.

Clarity through written form

Clarity through written form

A loan contract between private individuals does not require a written form. A handshake and handing over the money are enough.

In the case of an oral contract, however, some points remain unspoken and mostly neglected.

Therefore, a handwritten contract is recommended, which reflects the essential content of the contract:

  • Loan amount and date of payment,
  • Amount of interest and term,
  • Repayment modalities,
  • Termination of the contract and termination options as well as, if necessary
  • Collateral agreements.

If there is no agreement on the termination of the loan contract and on the regulation of the termination, the lender can terminate the loan at any time.

The remaining amount is then due immediately. You can find a number of sample templates, such as this one, on the Internet under the search term “loan contract model”.

The agreement of collateral is highly recommended, especially for larger loan amounts. Formulating the right contractual clause is often not so easy for private individuals. It makes sense to get expert advice. It is also possible to order a mortgage or mortgage, but this must be done with the involvement of a notary and the land registry.