In the case of an instant loan with no upfront costs, the borrower receives the loan applied for within a short period of time and only has to pay a processing fee to process the loan application if the loan is actually approved. The explicit application of a loan as being granted without any upfront costs is actually superfluous, since the calculation of fees for examining a loan application is not permitted anyway.
Even the calculation of processing fees for lending is not permissible, according to the opinion of consumer associations, which is confirmed by some courts, since the banks process the application in their own interest. However, the prevailing legal valuation of processing fees states that they are permissible in the event of an actual loan payment and are to be included in the effective annual interest rate.
What is the advantage of instant credit?
The instant loan with no upfront costs is paid to the borrower’s account at the latest after two bank working days. Banking days are all days except for public holidays, Saturdays, Sundays and the twenty-fourth (Christmas Eve) and the thirty-first December (New Year’s Eve). In addition to national holidays, the days off on which the loan is paid and that of your own bank are decisive for the practical payment of an instant loan, so that depending on the location of the financial institution, customs days such as Rose Monday or Violet Tuesday can have the same effects as bank holidays.
Payments can be accelerated to a bank working day if the loan applicant is already an existing customer of the bank and the Postident procedure does not have to be carried out. Furthermore, financial institutions with a banking license from Luxembourg can pay out the instant loan more quickly because they can accept a photocopy of their ID card as proof of identity. Some banks offer instant credit with no upfront costs and no proof of salary.
The basis for waiving a proof of salary for instant loans is that due to the promised quick payment, a careful review of proof of income for the bank is not possible. The bank’s waiver of a salary certificate does not mean that the bank does not provide information on the borrower’s income. Rather, it must be compulsory because it is obliged to make a budget calculation for the loan applicant. Applicants must not allow themselves to be misleading in the loan application, as these entitle the bank to immediately terminate the loan agreement if it is discovered.
Compare interest rates from different providers
Customers are willing to pay a higher interest rate for an instant loan with no upfront costs and quick cash payments than for a loan with a normal processing time of one to two weeks. Even if a moderate markup is appropriate for the quickly disbursed loan, consumers can avoid excessive interest claims by comparing prices. The effective annual interest rate is decisive, since only this value takes into account all costs associated with taking out the instant loan, such as the one-time processing fee. Other differences between different instant loan providers relate to the possible amount of the loan amount and the number of installments to be agreed.