Legislation only allows licensed banks to grant loans. The few permitted exceptions include installment payment agreements with a department store or mail order company, as well as mortgage loans and employer loans. The non-commercial lending of money between friends and relatives is also allowed. Organized loans from private donors, on the other hand, are only seemingly loans without a bank.
Organized personal loans
Organized personal loans tend to be perceived by consumers as a bankless loan, as the decision to grant credit is made by private donors. From a legal point of view, however, a licensed bank is involved as a credit intermediary, through whose account the loan is processed. Operators other than licensed banks are not permitted for private loan brokerage websites.
Loans not actually granted by a bank
The mortgage loan is the oldest loan without a bank. The loan amount is paid out after the pledge has been handed over by the pawnbroker. Pawn shops are not considered banks, but receive a special concession for their work. The employee takes out an employer loan in his company. The payment is made by the employer, as a repayment it is customary to keep the agreed repayment with the next pay slips.
In most companies there is a company agreement regarding the maximum amount and duration of an employer loan, in other cases it is granted after a personal negotiation. Helping out with necessary amounts of money among friends is not always unproblematic. If it is not just a matter of minor amounts, a credit contract should be concluded in writing, in which clear repayment dates are regulated.
When the merchant approves payment in installments, he grants a dedicated loan. Many mail order companies and some stores process payment in installments directly with the customer as a loan without a bank, so the buyer transfers the installments to the dealer. However, not every installment purchase is made without a bank, because some sales give their customers a bank loan.
As a last resort to get a loan without a bank, there are social institutions and the job center. There are strict requirements for granting credit, such as receiving unemployment benefit II for loans from the job center, but the repayment is made in small installments and is largely interest-free.
What are the advantages of loans without a bank?
Most loans that are not directly processed through a bank are not entered in the Credit bureau. Pawnbrokers and friends cannot make Credit bureau requests anyway. Employers often have the option of obtaining Credit bureau information, but often do not. Even if they do this, they will not report the borrowing to the protection community.
Mail order companies and department stores inquire with Credit bureau about the creditworthiness of the customer who wants to pay in installments, but they receive less information than banks. Above all, existing credit obligations are not included in the Credit bureau information provided to a dealer.