The discretionary credit, more or less affectionately referred to as Dispo,
It is one of the most widely recognized forms of loan in Germany. The appeal lies in the uncomplicated processing and the maximum flexibility: once you have entered the current account with the house bank, the credit line can be used again and again, without any need for an audition. Orders can be made in any way that is also available for transactions from the balance: cash withdrawals are possible, as are direct debits or bank transfers.
The disadvantage of the disposition credit lies in its very high costs.
Depending on the bank and the client’s credit rating, lending rates of fifteen percent on the loan amounts used are not uncommon. Those who are often in the red of their checking account are well advised to look for more favorable alternatives in view of these conditions.
Anyone who has made use of his discretionary framework to a greater extent due to unusual burdens (eg due to an unplanned new purchase) and is unable to make a prompt repatriation from the current income can not do so by accepting a Installment loans lower the cost of liabilities. However, there are then fixed obligations due to the monthly installments and the flexibility is limited.
More suitable are so-called framework loans (often referred to as call-off loans), which are offered by various banks. They are a flexible credit line that can be used at any time. Costs and / or interest accrue only on actually available amounts. The main difference to a discretionary loan is that credit can not be settled via the current account and that a regular repayment has to be made. However, this amounts to only a small percentage of the amount used. Back-paid loans are immediately available again, so that call-off loans are also suitable for bridging financial bottlenecks. The order is usually made by bank transfer from the account to be set up specifically for the call-off loan to the usual checking account. The interest rates on call loans are generally significantly lower than those of a disposition credit finally, the products were designed by the banks as substitutes for them.
Neither the replacement of a dispositional framework by an installment loan nor the shift to a credit line should encourage consumers to live above their own conditions and to be indebted for a fee.