From installment, annuity and mortgage to repayment loans: there are numerous ways to adapt the mortgage to individual needs. Finding yourself right in the variety of loans is not always easy.
Whether in private or professional matters: growth costs. For companies, these are mostly resources, plants and machines, as well as locations that mean high costs. In private, there is often a change in the living situation in the form of building or buying a house, which is realized with a loan. Modern and flexible solutions for financing at suitable conditions are therefore more in demand than ever.
Digression: Development of the amount of lending from 2014 to 2017
According to the banking association, the total amount of loans granted to private individuals as well as to companies and self-employed has risen continuously in recent years. From 2014 to 2017, the total amount of private loans rose from USD 1,078.6 billion to USD 1,192.3 billion. For companies and the self-employed, the amount rose in the same period from 1,291.6 billion to 1,403.1 billion dollars. Loans were mainly taken over by credit banks, savings banks and credit unions.
This division is interesting because despite the continuing branch extinction and merger pressure, a large number of companies still rely on the house bank. Loyalty to the house bank is a traditional and strong concept, especially for small and medium-sized enterprises (SMEs). The reason for this is that good payment behavior and well-known liquidity development result in credit advantages for the company. Private individuals, on the other hand, tend more towards financial institutions that specialize in lending and often leave their house bank out.
Popular and current loan types for home finance
There are basically two classic types of mortgage loans. These include the repayment loan and the annuity loan. Both models are popular, but differ in some ways. Here it is not always easy to keep an overview or to recognize which loan best suits your own life concept.
With an independent companion like VIST, it is possible to compare offers from over 400 banks with one another in order to receive individual and tailor-made construction finance. In addition, the financing expert provides practical tips and understandable information on the most important subject areas, for example here, on the topic of annuity loans. It is also possible for laypersons to easily understand and apply for annuity loans.
The annuity loan is so popular with construction and real estate finance because the monthly rate remains the same. It is a safe and manageable form of loan, which is why it is used most often. While the monthly payment is basically constant, the relationship between interest and repayment changes over time. The latter is increasing.
The annuity loan is possible in various forms:
- variable loan with a monthly rate that changes every three months
- committed loan with an interest rate that remains for an extended period of time
It is also possible to specify special repayments or a repayment rate change in the loan agreement. Other types of loans include:
- Installment loan : This is another popular loan model. In contrast to annuity loans, the rate decreases over time due to the decreasing interest burden. For this reason, many refer to this loan as “installment repayment”. The counterpart to this is the “final loan”. A repayment is planned for the end of the term with the full amount. By the way, the installment loan is often grouped together with the annuity loan under the generic term “repayment loan”.
- Personal loans: This variant is an investment by private individuals. Family members are often considered, especially if the equity capital is either insufficient or not available at all. What is important here is a particularly good relationship of trust with each other. Unlike the bank, lenders are at a disadvantage when it comes to payment difficulties when it comes to pressure from family or friends.
Popular financing options for companies
Popular financing options for businesses are
- Working capital loan : This form is often used to finance current assets. This means that the time between purchasing and sales is bridged. A repayment is made from the sales revenue.
- Growth loan: Whether it’s a new location, an expanded team, more products or more targeted marketing, the growth loan covers all expansion plans. Nowadays, digitization measures often also count in this area.
- Investment credit: This loan is used to finance business investments such as machinery, vehicles or means of production. Financing of real estate also belongs to this area. At the same time, these investments count as security.
- Productivity increase: With this loan, all conceivable restructuring of a company can be financed. This includes automation and digitization, among other things. In the age of Industry 4.0 in particular, this type of financing is becoming increasingly attractive for many companies. To optimize processes permanently, to remain competitive and to be able to meet customer needs in the long term, there is no way around digital productivity today.
A future outlook: financing solutions from artificial intelligence to digital full credit
More and more industries are currently shifting their focus. In the financial sector too, the character of digitization is constantly emerging despite the initial difficulties. May it be AI customer service interfaces or cooperation between banks and FinTechs, the industry is gradually changing. The following three digital trends already provided new financing options – especially for companies – in the past year:
Artificial Intelligence (AI)
Artificial intelligence is an increasingly important topic in many companies. In the future, AI systems will carry out credit checks and support customer advisors. The ongoing learning process in particular makes it possible to make more precise statements about the probability of failure.
Overall, AI primarily serves to accelerate the granting of a loan.
FinTechs is short for financial technology companies. They make the path to financing easier, faster and cheaper. Digital marketplaces for financing with banks and alternative donors open up new access routes. In the future, this should enable a digital loan without analog steps.
Overall, financing without a bank is becoming increasingly popular. Various projects are presented on online platforms and supported by commercial and private investors with individual sums. There are various forms of crowdfunding:
- Crowdinvesting and
- Crowd lending
Crowdlending is about lending to companies or individuals. These are mediated by internet platforms. In contrast to crowdinvesting, the lender does not receive company or profit shares, but interest and repayment installments on a monthly basis over a certain term.