We are used to going to the bank in the event of a financial distress in order to obtain a loan. If we do that, then we should also know how much money we need and how much we can afford monthly. Sometimes the cautious bankers even want to know what we need the money for. In return, we ask customers for information about the costs that are incurred, because as elsewhere, supply and demand also determine the price in lending and competition stimulates business.
If the application for credit is completed, it may take a few days for the money to be available. Internet banks also offer a 24 hour service. In any case, money is seldom available at the precise time it is needed, and that can be annoying or costly in the form of commitment rates. Especially when it comes to building a house, it can be expensive, because these are higher amounts that are provided, and higher amounts cause corresponding interest costs.
Many know the overdraft on their own account. Here, it is quite convenient to simply go to the counter or ATM at the limit to deduct the amount you want. However, there is a grave disadvantage: the interest on the repayment credit extends to dizzying heights and often more than doubles the interest rate on the installment loan.
The solution to such problems is called “emergency credit”.
The call-off loan generally runs in such a way that the selected financial institution grants a certain credit line. 25,000 as a maximum are customary, but depending on the bank, there are also more in it, namely up to 40,000 at DunerBank If the request is made for the loan, then the customer can avail himself of a loan within the set framework in any amount. Upon request, the bank will transfer the money to a pre-defined account.
Some banks do not bother with peanuts and require a minimum loan of £ 5,000. Others are happy to help their customers out of trouble with 250 and the rest is in between. And while the Internet provider SanTer Bank does not ask for a minimum amount, the Royal Bank of Scotland offers the call credit starting from 0 (!).
With the call-off loan, the prospect takes three advantages for himself.
1. The money is immediately available without waiting, as in a deployment. However, the call credit does not incur any provisioning interest.
2. The borrower can repay at will at any time, depending on how his financial scope is designed. So he is not tied to fixed rates and can also pay off as much as he likes. Also amounts over the agreed minimum redemption are allowed.
3. The call-off loan is often much cheaper than an installment loan from commercial banks and savings banks. He even beats the credit line by length.
The interest rates are, as already mentioned, quite favorable, ranging between approximately 6.5% and over 14% (as of December 2008).
Many use the favorable interest rates to replace expensive overdrafts. That’s a good intent. However, caution is advised if the call-off loan is to be used in addition to existing loans, because this paves the way for the debt trap.