Many will ask themselves this question when it comes to financing a project. It is not unauthorized and any prospective borrower should deal with the issue before a loan is taken. Especially with larger plans, such as house financing or car buying, it is important to make a well-considered decision.
In essence, it is important that you prepare a comprehensive budgetary statement to determine how much credit you can get. You should compare your income and expenses and ask yourself the following questions.
- What is your monthly income (alone or with the partner)?
- Are there any capital gains or investments that can be taken into account?
- How much rent and additional costs are there monthly?
- What other fixed costs, such as mobile phone, Internet, insurance, etc. are incurred?
- What is your average cost of food?
- Do you spend on leisure and personal interests / hobbies?
- How much do you have to spend monthly for your children (eg for education, maintenance, etc.)?
- Are there any other obligations in the form of loans?
These and other factors influence how high a future loan can be for you. Depending on how large the sum that comes out on the bottom line in your budget, you can apply for a more or less high credit . In addition, data on your solvency in credit bureaus such as Schufa has an impact on how well your credit rating can be judged.
Calculate your personal credit options
Knowing how much money you have on a monthly basis helps you to better understand what loan amounts you can potentially receive. Surely you already know what you want to finance. Accordingly, you think about the sum that is necessary for this project.
With the knowledge of the required loan amount, you can now target the search for suitable providers. Depending on the financial scope, higher or lower monthly installments are now available to you to finance your dream loan. With the term, this factor can be influenced. For longer terms, the credit rates are correspondingly lower. Nevertheless, the entire interest burden is higher, you should always keep that in mind.
An example calculation
By means of a calculation example we would like to clarify the information given to you a little bit. Here we want to start from a fictitious person named Lercel, who is single and has a permanent employment relationship. We start from the average values for persons living in Germany.
- Monthly net salary of 1972.26 euros (based on data from the German Pension Insurance for the estimated average income for 2018)
- Monthly budget expenditure of 1240 euros (according to Statista for the year 2016. These include costs for rent, utilities, food, leisure, etc.)
These figures give Lercel a freely disposable amount of € 732.26 per month. Now let’s assume that Lercel also finances a small loan and a car and puts monthly reserves aside:
- Rate for the small loan: 90 euros
- Rates for the car loan: 180 euros
- Reserves: 150 euros
This results in 312.26 euros, which are completely free for Lercel. Now he wants to take out a loan of € 10,000 and turns to Postbank for it. We now assume that he would receive the conditions from the 2/3 example:
- 10,000 euros net loan amount
- 60 months duration
- Annual percentage rate of 3.78%
This results in a monthly payable rate of 187 euros. This could easily be carried by the capacities available to him. In principle, in this example, even a higher loan amount would be possible or a shorter term. Lercel would also have the opportunity to repay the borrowed 10,000 euros in a shorter time than the specified 60 months. Alternatively, he can always get a short loan from vendors like Neofunding with such an income.