What exactly are blank loans and who gets them? Banks can generally be divided into two different types of credit, as a general category, so to speak, before the credit itself can be divided into other lines. These two main categories of loans are firstly secured loans and secondly blank loans. If you want to determine which type of loan can be attributed to a particular loan, this is usually individual and cannot be generalized as easily because several factors are involved in the determination. It is the same with the advantages and disadvantages that a secured loan or a blank loan can bring.
What is a blank loan?
The best way to explain the blank loan is to distinguish it from the secured loan. Simply put, a blank loan is nothing more than a loan from a bank that is not secured. In the case of a blank loan, there is no collateral for the loan, which also means that the borrower does not have to provide any security, such as guarantees or the like, in order to obtain the loan. Well, first and foremost every borrower dreams of not having to provide collateral for the loan – but right here you have to put the thing about the blank loan into perspective: Why should a bank not want collateral for the money that it gives its customers gives ? Simply because blank loans are usually only given to two types of customers: Either these are customers with excellent credit ratings, with whom the bank can be sure that they can repay the loan, or the borrower’s loan amount is so low that securing the loan would not be profitable for the bank, as this is always associated with costs.
A blank loan for everyone
A typical blank loan that is made available to almost every borrower is the overdraft facility. As is well known, the overdraft facility is an overdrawing of the account towards a specific line of credit that was agreed with the bank. With the overdraft facility, the bank does not need to secure the sum, it does not require any collateral. This is where a disadvantage of the blank loan comes into play: Although the banks do not collateralize the loan, the interest paid on the overdraft facility is also relatively high.
Is there an installment loan as a blank loan?
In principle: yes. But if you go from principle to practice, you have to take a closer look at the matter of installment credit as a blank loan. Whether the bank grants an installment loan as a blank loan depends primarily on the potential borrower. To be more precise, about his creditworthiness and the amount of the loan he would like to apply for. If you have a negative entry in the Schufa, you can actually forget the matter with the blank loan – this is simply too risky for the bank and will require possible collateral from the borrower.
Real estate loan as a blank loan
There is an interesting thing about blank loans: Real estate loans are sometimes also given as blank loans. Real estate loans are known for their very high amount – why are they not secured? It is the case that a large part of the loan amount of the real estate loan is secured by a mortgage. However, the bank is not able to rate this mortgage as collateral for the entire loan amount. In this respect, it may well be that 10 – 20 percent of the real estate loan is a blank loan.