A negative account balance does not fundamentally speak against the application for a consumer loan. In view of the high cost of an overdraft facility, there is a sufficient amount of credit to balance the checking account. The interest rate on a consumer loan is generally significantly lower than the interest on the credit limit on the bank account.
The negative balance usually does not affect creditworthiness
Difficulties in taking out a loan, despite a minus in the account, only arise if the desired lender obtains a bank report or shows the bank statements and the account is also overdrawn. The minus on the account alone does not constitute an overdraft. As such, financial institutions only describe a minus on the checking account that has not been approved by the overdraft facility.
A bank information does not contain any information about the credit balance or the current negative balance of a bank account, but only the information as to whether the customer has exceeded the available credit limit. When it comes to loans to private customers, most financial institutions do not request bank information, which is to be processed in writing and therefore takes time.
In the assessment of submitted bank statements, the use of the overdraft facility granted is considered uncritical, while the overdraft usually leads to a rejection of the credit request, as this is contrary to the contract. Consumers either take out a loan despite the minus in the account in good time before the overdraft facility is overdrawn or first request an increase in the overdraft facility.
What should you watch out for when taking out a loan despite a minus on your bank account?
If consumers take a loan into the account despite a minus, make sure that they can pay the loan installments to be paid without increasing the negative balance of their checking account. The longest possible loan term reduces the monthly charge as well as a price comparison. This can be done online using a loan calculator, whereby the effective annual interest rate is generally relevant for the loan costs and thus for the decision.
The nominal interest rate is important if the borrower wants to redeem his loan prematurely and therefore it is necessary to recalculate his interest. If the loan taken out balances the account balance despite the minus in the account, borrowers make sure when planning their future expenses that their account balance subsequently remains in the balance.