Single assignment credit – the advantages

For business loans, but also increasingly for personal loans, it is common to secure them with a single assignment. This has the advantage for the borrower that there are no further credit costs such as land register entries when mortgaging a property and the bureaucratic effort is reduced.

The single-assignment loan is therefore particularly worthwhile for short-term loans, or smaller loans, in business transactions to compensate for short-term defaults or to avoid having to lend large assets for rather small sums.

A loan with individual assignment means that a fixed value

credit loans

such as the property, is not lent, but instead a loan is given to the lender against a third party debtor. These can be payment claims against these, eg B. in the form of an unpaid invoice from a customer, or service claims against third parties, eg B. an existing credit or in the form of an investment or capital investment.

When assigning, you should pay attention to several special features of this type of loan. It is important to distinguish between a loan with individual assignment and a loan with global assignment. In the case of a credit with a single assignment, only a single claim against third parties is given as a pledge; with a global assignment, all claims on third parties are granted as a pledge.

In the event of a loan default, this means that the creditor has the right to “rip off” until the outstanding loan amount has been paid, which is associated with a large loss of capital due to the loss of income from the debtor.

The advantage of a single assignment loan

single assignment loan

Therefore lies with the borrower, since only a maximum of one claim can be eliminated – this increased risk compared to a global assignment, however, can be paid by most banks with an interest premium.

In the case of a loan with individual assignment, it should also be contractually specified exactly which claim is made to whom and in what amount by the borrower. A partial pledging of a claim is also possible, eg B. if this should be higher than the requested loan amount.

A borrower should also make sure that an individual assignment loan

assignment loan

It is a silent individual assignment and not an open individual assignment. In the case of an open individual assignment, the third-party debtor is informed that the claim to him is now deposited as a pledge with the respective lender – this is not the case with a silent individual assignment, here only lenders and borrowers know about the pledge.

In business transactions and companies in particular, it is often extremely disadvantageous if, as in the case of an open individual assignment, third-party debtors are made aware of a loan, as this has the smack of an insolvency, which can lead to a loss of reputation. Because orders to possibly insolvent companies are of course reluctant to be awarded for self-protection.

In the case of private debtors, this is reflected in an assumed weakness in creditworthiness – if the income is pledged in the form of a loan with an open individual assignment, the employer can also become aware of a financial emergency.

If an individual assignment loan is repaid at the end of the term, the claim to the respective claim is also returned to the borrower. The retransfer of the individual assignment should also be contractually regulated.

Loan with low installments.

Different banks offer loans on different terms. Some prospective creditors may particularly value low installments in order to keep the monthly charge low. If you are looking for a loan with low rates, you have several options.

Choose a long-term loan

Choose a long-term loan

Many banks offer their installment loans on flexible terms. Interested parties can choose both the loan amount and the loan term themselves within a certain range. Since borrowers can largely determine both the loan amount and loan term within the specified range, they can also influence the monthly installment. The longer the term is chosen, the smaller the monthly installments.

The terms of a installment loan can be very different. Depending on the bank, the shortest term is 6, 12 or 24 months. The maximum possible term is usually 84 months. In individual cases, installment loans with a term of up to 120 months are also possible. It should be noted here that some banks adjust the loan interest to the chosen term and the loan interest can be higher for a longer term. Banks see a loan with a longer term as a higher default risk and try to compensate for this with higher interest rates.

Prospective borrowers should carefully consider what is possible and which loan rate best fits their own budget when choosing the term and the amount of the loan. Higher interest rates and thus higher loan costs have to be weighed against a long term and low credit rates. If you choose a long term, you should make sure that special repayments are possible.

Choose loan with final installment or down payment

Choose loan with final installment or down payment

A loan with low installments is also possible if potential borrowers opt for a loan with a down payment or a final installment. The credit rates can be significantly reduced by a down payment or a final installment. However, loans with a down payment or final installment are usually only offered to finance a car.

What are the benefits of low credit rates?

Those who opt for a loan with low rates have the advantage that the monthly charge remains low. Low rates also fit into a rather small financial framework.