The term call credit basically describes several forms of loan: the borrower is provided with a certain personal credit line, which is why one often speaks of call credits as credit. The advantage is that an on-demand loan basically promises the greatest possible flexibility: the borrower can call up amounts under his credit line as required and can also repay them flexibly or at any time. Sufficient creditworthiness is required for the call credit.
When calling up a loan, the borrower is not required to take out residual debt insurance. A call credit can be easily compared with the current account for entrepreneurs or with the overdraft facility and the credit limit on a credit card account. So there is a cap on the credit line, or, if it is not capped, the borrower has to accept penalty interest if his credit line is exceeded. In general, a real call credit is not tied to a term, but many banks require that a certain percentage of the debt is repaid monthly, similar to a credit card account.
Call credit interest
A variable interest rate is normally agreed for a call credit, whereby the amount of interest is based on the Lite Lender and adjusted accordingly on a quarterly or monthly basis. Depending on the agreement, the interest accrued will be debited from the borrower’s reference account or current account at the end of each month. Beware of the pitfall: some banks require a minimum borrowing, even if no money or less money is currently required.
Repayment on call credit
The agreements regarding the repayment of the borrowed capital can be quite different. Basically, however, the conditions of the banks differ in that some leave the repayment entirely to the borrower, while others provide a minimum repayment. However, repayment is still more flexible than with a conventional installment loan – if the loan requirement is not only extremely short-term, call-off loans are ultimately cheaper than the known very expensive overdraft facility.
Caution: On-demand loans pose a certain risk of over-indebtedness, especially for people who are not particularly good at dealing with money. To what extent you actually need a loan should therefore be carefully considered before applying for a loan.