Financing declined – Is I legally entitled to a loan?

Currently, many consumers can afford a loan, as interest rates have reached a low level in almost all lending areas. Nevertheless, there are still numerous private individuals as well as companies in which a loan request from one or more banks is rejected.

Often it is incomprehensible to those affected and some companies and citizens even insist that they would be entitled to a loan. In fact, it is true that there is no legal right to a loan.

Individuals and businesses affected

Increasingly, both individuals and businesses are reporting that they have received a bank loan rejection request. For businesses and companies in particular, such refusals can be life-threatening, since it is precisely at the beginning of an activity that investments must be made that can often be financed exclusively through a loan.

While it is understandable that the credit seekers concerned are frustrated and sometimes argue to the bank that they have a right to a loan, this is unfortunately not the case in practice. The situation is similar for private individuals who, for example, do not receive installment credit, discretionary credit or real estate credit as a result of a lack of creditworthiness from the bank’s point of view.

Credit is a normal business

The fact that there is no legal right to a loan is well founded. In principle, financing, ie the granting of loans, is an ordinary business. This means that there are always two parties who must agree on the conclusion of the deal. Neither party can be legally required to enter into this business.

As a result, any bank can freely decide if and to whom it wants to lend money. Moreover, it is by no means always a negative thing to see credit institutions and other lenders exercising their right to apply for a loan now and then.

Sometimes banks only fulfill their legal obligation to lend money only to those borrowers who are likely to be able to repay the amount properly. Sometimes a rejection merely leads to protecting companies or private individuals from themselves.

Bad Schufa and lack of income as a main impediment

In the vast majority of cases, banks in any case do not object to a loan without reason, but generally lack either the lack of creditworthiness of the customer due to a bad Schufa or lack of income. In such cases, borrowers simply have few opportunities to improve their situation, unless the Schufa entry is unfounded and there is a prospect of income improvement in the near future.

However, it may sometimes be helpful to talk to the bank closely about the financial situation, or to provide collateral that ultimately leads to an increase in creditworthiness, which can then result in the bank being prepared to lend.

However, it should always be in the foreground that the monthly loan installment is easily portable, which consumers themselves can easily determine from a revenue and expenditure account.