Foreign currency loans can be very attractive to German borrowers. They promise to be doubly favorable by lower interest rates in other countries and a good exchange rate.
Moreover, a loan without Schufa information abroad is often no problem. Borrowers should also be aware of the risks before applying for a debt-free foreign currency loan.
What is a foreign currency loan?
The interest rate situations can differ significantly from one country to another. Switzerland and Japan in particular have had interest rates in recent years which were significantly cheaper for borrowers than in Germany.
A foreign currency loan is therefore taken out in the currency of the credit country and paid out in euros. As a rule, interest rates are not set for long periods and can change significantly, especially for long-term loans.
Loans abroad are as annuity loans, in which monthly installments are debited, and as bullet loans. Here only the interest is paid monthly or quarterly and the final amount is due only at the end of the contract. In the latter case, the borrower saves the necessary amount over the term of the contract with the help of repayment vehicles.
Who can apply for a schufa-free loan abroad?
Basically, this is possible for every capable German. Of course, chances of success are not the same for everyone. Even if a loan is available abroad without Schufa, a loan application is only worthwhile with an excellent credit rating. In addition to an income of at least € 2,000 per month, the provision of collateral is one of the prerequisites for obtaining a loan without Schufa.
Advantages of foreign currency loans
– Interest advantage
Foreign currency loans are so attractive because in many other countries lower interest rates lure. If the key interest rate in the destination country is below the European interest rate, borrowers can save a lot of money. In Germany, interest rates are based on the European Central Bank. Non-EU countries such as Switzerland or Japan can often offer better credit terms. For them, the interest rate is based on the national central banks.
– Exchange rate
Also, the exchange rate ratio can ensure that the loan is cheaper than originally estimated. If the euro rises in comparison to the foreign currency, the loan debt can be significantly reduced.
This is why foreign currencies are especially suitable for loans without Schufa, which have high volatility, ie are subject to comparatively many fluctuations.
– Credit report without Schufa
The Schufa is only active in Germany. This means that a foreign currency loan without Schufa information is possible at any time. The banks abroad use other credit checks to hedge their risk, and are mainly based on their income. So if you need a loan despite Schufa information, here is usually successful.
– Saving capacity
Foreign currency loans are increasingly being given as term loans. This has the advantage that the borrower not only benefits from the fact that the interest rates are lower than in Germany, but also can even through meaningful investment strategies yield from the money that he spends until the end of the contract.
Disadvantages of foreign currency loans
– Currency risk
The exchange rate can be curse and blessing for borrowers of a foreign currency loan without Schufa. If the exchange rate is advantageous for its home currency, it can considerably reduce the amount to be repaid. Conversely, if the foreign currency develops favorably, it is extremely disadvantageous for the borrower. In this way, even the better interest rate on schufa-free loans from abroad can be nullified.
– repayment risk
Most foreign currency loans are issued as a term loan. This means that the borrower only pays interest during the term and fully repays the borrowed sum at the end of the term. The borrower must therefore consistently save money in order to repay the loan without Schufa at the end of the contract.