What is a loan?

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The transfer of money or goods is called credit in German. Cash or goods are given to the borrower by the lender over a predetermined period of time. As compensation, the lender receives back the money given to him from the borrower, including an agreed interest rate. If it is a commercial loan, the lender grants the borrower a term of payment. At the agreed time, the claim will be settled with money.

Loans have a very long history

Loans have a very long history

It is not without reason that the word credit comes from the Latin word “credere” or “creditum”. Both words can be translated with faith or trust. Even in ancient Rome, rich merchants granted loans and asked for a fee for the borrowed money or the goods handed over. In the Middle Ages, princes and kings financed their wars with borrowed money, mostly from Jewish lenders. In the then German Empire, the Augsburg family Fugger was probably the largest donor for princes, kings and emperors. The first consumer loans in the form we know today were only granted around 1950. From this type of loan developed the many different loans that are made available to bank customers.

The most used form of credit is cash advance

The most used form of credit is cash advance

If larger purchases are made nowadays, these are usually financed by a loan. In this case, the lenders are usually the house banks with which the borrower also maintains the checking account. After a credit check and Credit bureau information, the agreed loan is transferred to the borrower’s checking account. The loan amount is freely available if no special purpose has been agreed. The loan is repaid with monthly installments, which generally do not change until the end of the term. Loans are divided into short-term, medium-term and long-term loans according to the term.

The loans are tailored to the consumer

The loans are tailored to the consumer

Banks and retailers provide various loans for every type of financing. Anyone who builds or buys a property receives a loan for building finance. The trade offers goods loans. Very often, an overdraft facility is used or a framework loan is granted.


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