Installment loan for Hartz 4 recipients

In the case of an installment loan, the borrower agrees regular monthly installments with the same amount, only the first or last installment deviates slightly due to the desired rounding to smooth amounts. Hartz 4 receive unemployed and possible other members of their needs community after the unemployment benefit 1 benefit, which in some exceptional cases lasts for one year, and if they are not entitled to the corresponding benefit. Hartz 4 benefits are also possible as an increase in the salary or the ALG 1 salary, provided the income is not sufficient for living expenses.

Bank loans at Hartz 4

Bank loans at Hartz 4

As the job center’s services are sufficient to cover their livelihood and there is therefore no financial scope for loan repayment, banks are hesitant to grant an installment loan to Hartz 4 recipients. The best chances for a successful installment loan are the personal audition at the house bank for small loan amounts. Another option to successfully apply for an installment loan for the Hartz 4 recipient is to provide a guarantor or to borrow jointly with a co-applicant.

Since guarantees, in contrast to joint loan applications, can be declared invalid if the guarantor is obviously overreached, the bank must make significantly greater demands on its financial strength. At the same time, it has to convince itself that the guarantor is aware of the scope of his consent. The co-applicant must have a sufficiently high income to repay the loan, but the nature of the relationship with the Hartz 4 recipient is insignificant.

Under no circumstances can an installment loan for Hartz 4 recipients be obtained by providing incorrect information in the loan application, even if there is a corresponding temptation for loans advertised by some direct banks without proof of salary. Corresponding information is also required in the loan application if the submission of proof of income is not required. Incorrect entries authorize the bank to terminate the loan even if the loan is properly repaid and also constitute a crime.

Additional options for installment loan borrowing with Hartz 4

Additional options for installment loan borrowing with Hartz 4

Hartz 4 recipients can take out a loan via platforms for personal loan brokerage. In the case of an installment loan for Hartz 4 recipients processed via such a platform, the loan seeker specifies the intended use of the amount of money to be raised in addition to the desired loan amount. At the same time, he describes his financial situation, including the Hartz 4 connection, openly.

The private lenders registered on the platforms often base their decisions on social criteria and the planned use of money. In order for the loan to be repaid as agreed, the Hartz 4 beneficiary agrees low credit rates.

The installment loan for Hartz 4 recipients via a placement platform is particularly suitable for low loan amounts. If the installment loan is to be taken for urgently necessary purchases, a loan agreement with the case manager in the job center is advisable, for which no interest is payable.


Bad debt coverage in liability insurance


Bad debt coverage in private liability is important!

Bad debt coverage in private liability is important!

Private liability insurance usually protects consumers from claims for damages that third parties have against them. But what happens if you become the victim yourself and the victim does not have his own liability insurance.

Then a clause called bad debt coverage comes into play. This important clause is by no means anchored in every policy. In the event of a claim, it protects consumers from those in our society who do not have their own personal liability.

But what exactly is meant by bad debt coverage (short: bad debt coverage)? And what services in relation to this coverage must consumers pay close attention to when taking out liability insurance? In this article, we go into more detail on these and other questions and give interesting tips on all aspects of bad debt coverage in private liability.

Why is bad debt coverage necessary at all?

Why is bad debt coverage necessary at all?

Around a quarter of households in Germany do not have private liability. In return, this means that the risk of being harmed by someone who is not covered by liability insurance can be very high.

If a consumer is now harmed by such a person and he cannot pay the damage out of his own pocket, he often remains at the expense. With minor damage to property, this may not be tragic. But what does it look like when, for example, serious personal injuries are caused, which could potentially run into the millions.

Damage example:

  • A cyclist seriously injures a pedestrian due to careless behavior. As a result, the pedestrian becomes unable to work and can no longer carry out his work. This personal injury can potentially go into the millions with claims for pain and suffering and pension payments. Since the cyclist does not have private liability insurance, the injured party remains at full expense.

This example shows how important it is to cover bad debts in liability insurance . If the injured consumer had integrated this component into his policy, his insurance would have to cover this damage.

Differences in performance of bad debt coverage

Differences in performance of bad debt coverage

In practice, however, there are some differences in default coverage. For example, there are providers who only offer adequate protection from a certain minimum loss level. But where exactly are the policy differences? The following points should be noted:

    • Default coverage itself: Unfortunately, there are still many tariffs that do not cover this risk. However, the tariffs that include default coverage can be filtered using our comparison calculator.
    • Minimum damage amount: When selecting the tariff, it should be noted that this provides for a moderate minimum damage amount. As a rule, this is $ 2,500 per claim. Very good tariffs completely dispense with the minimum damage amount and pay from the first USD.
    • Limitation of the sum insured: Especially very low tariffs do not pay up to the agreed sum insured, but limit the bad debt coverage to, for example, $ 1,000,000 instead of $ 5 million per claim.
  • Exclusion from deliberate action: Consumers never receive a personal liability benefit if the damage was caused intentionally. However, there are providers who integrate tariff protection in their tariffs for deliberate action and also for crimes within the framework of bad debt coverage. In this case, the consumer would also receive benefits if he became a victim of a crime. Example: someone is beaten for no reason.

Default coverage is subject to certain conditions

Default coverage is subject to certain conditions

Consumers must also note that bad debt coverage only applies under certain conditions. If the above-mentioned conditions, such as the minimum loss amount, are met, the insurance conditions also stipulate that the damage to the person causing the damage is only paid if:

    • there is a legally enforceable title against the injuring party, or
    • there is a notarized acknowledgment of debt in front of a notary and any meaningful execution has been unsuccessful.

In practice, this means that consumers have to take legal action against the polluter in order to receive any private liability insurance benefits. Legal protection insurance can therefore make sense.

Because this would in advance possibly pay for the costs of the legal dispute. If you do not have legal protection insurance, you can also choose private liability that offers legal protection within the framework of bad debt coverage. Our comparison calculator can easily determine which tariffs offer this extended legal protection.

Legal protection in the event of bad debts

If you do not have legal expenses insurance, you should select a liability tariff that offers legal protection for default coverage in addition to bad debt coverage. Because the tariffs only pay if all legal remedies have been exhausted to receive the compensation.

Service exclusions for default coverage

The bad debt coverage also does not apply if the insured person is entitled to benefits from a social insurance provider or the benefit can be claimed from another private insurance such as household, residential or legal expenses insurance. Nevertheless, there are sufficient reasons for the clause of bad debt coverage in private liability.

Compare tariffs with bad debt coverage

Compare tariffs with bad debt coverage

Since this clause is so important in the contract terms, this point has been integrated into our free comparison calculator. This gives consumers the opportunity to filter all tariffs that have anchored this component in their contracts.

It is only important that you pay attention to the criteria mentioned above, such as the minimum amount of damage. These points can give you a first overview of the performance comparison that is available in the computer. In addition, one should take a look at the insurance conditions of the individual providers.

Cream Bank Credit Score System

In Indonesia, 78% of the population do not have bank accounts or are called unbanked, this figure is far above the global median value of 38%. This illustrates the uneven economic growth in Indonesia, while Indonesia’s economic potential is quite promising.

The unbanked people who are unable to get banking services are caused by the large number of regions in Indonesia that have not been reached by bank services. This makes them unfit for bank facilities such as business capital loans, while to improve their welfare, they need capital to do business. Therefore, it is important to provide financial access that can reach them, the people at the bottom of the pyramid to be more empowered and prosperous.


Credit Risk Assessment

Credit Risk Assessment

At conventional banks, to provide loans to business actors, banks conduct an analysis of credit risk based on a history of transactions made by prospective borrowers and the value of the collateral. How can these unbanked people get loans while they don’t have accounts that make up the history of these transactions and also don’t have anything to pledge?

In the United States, all public borrowing history recorded properly and centered with reference to the social identification number (Social Security Number) held by any residents who had income in America. From this data obtained credit scores that have become global standards, called the FICO score. This makes it easier for financial institutions to get a person’s credit risk score.

In Indonesia there is already a similar system under the control of Best Bank called the Debtor Information System (SID). This system has a credit score of someone who has transacted in banking and has a blacklist containing information from people who have poor credit scores. However, this system can only judge someone who has been reached by a bank.

In other words, there is no national standard for unbanked people in assessing their credit risk in Indonesia. Here is the role of Rite Lenders , one of the financial technology products developed by Cream Bank. Rite Lenders is an integrated system that can provide an accurate analysis of a person’s credit risk value even though that person has never been reached by banks. Different from systems such as SID which rely on the history of banking transactions, Rite Lenders adds psychometric survey data and economic feasibility surveys as consideration for assessing the credit risk of the prospective borrower. By using a machine learning approach (machine learning), Rite Lenders can assess credit risk after studying data from a prospective borrower in the past.


Credit Score for Inclusive Economics

Credit Score for Inclusive Economics

The Rite Lenders credit risk rating has provided investors with insight into the borrowers to be funded so that they can choose a suitable borrower candidate, and also makes the borrowers eager to repay their installments so that their credit risk rating is well maintained. This forms an ecosystem of mutual support between borrower-investors.

Rite Lenders can not only be used for Cream Bank’s Peer-to-peer lending platform, but the resulting credit rating can be used by other financial institutions in Indonesia. With the growing use of Rite Lenders in other areas that are still not reached by banks, the realization of an evenly including economy in Indonesia is not just a dream.

Consolidation Loans

Where can you take a consolidation loan for up to 10 years?

Consolidation loan advertisements usually highlight several issues: the maximum value of liabilities committed, the interest rate, the amount of commission for granting the loan (so-called preparatory commission) and the long repayment period.

The loan period of up to 9 years – 10 years can be tempted by people who are currently struggling with too high installments for several loans.

However, it should be remembered that reducing the installment by extending the repayment period also results in an increase in the total cost of borrowing. This relationship can be illustrated with the help of two interesting examples.

The ten-year consolidation period is becoming more common …


Before presenting specific calculations, it is worth noting that the long repayment period is increasingly common for consolidation loans.

You can find out after checking the offer of several leading banks (see the table below). In the case of twelve lenders, the maximum lending period varies from 7 years (84 months) to 10 years (120 months).

It is worth realizing that even a seven or eight-year limit on the loan period does not prevent the consolidation of liabilities of a typical value.

Maximum extension of the repayment period is unlikely to be profitable


The effects of extending the repayment period were analyzed on the example of two consolidation loans (value: USD 20,000 and USD 50,000), which have fixed interest rates and preparation commission typical for the current offer of banks.

After taking into account the parameters of these two loans, we calculated the amount of a single installment and the sum of equal installments at different repayment periods (5 years, 6 years, 7 years, 8 years, 9 years and 10 years).

The sum of installments reflects the total cost of the loan, and a single installment indicates the level of the borrower’s monthly financial burden.

Changes in these values ​​are particularly interesting when extending the repayment period by another year. In the case of the first consolidation loan (USD 20,000), extending the loan period by one year results in a 3% increase in the total amount to be repaid.

It should be noted, however, that the fall in a single installment with a longer repayment period is not identical. If the repayment period is extended from 5 years to 6 years, an increase in the sum of installments by 3% can be “converted” into a reduction of the monthly installment by 14%.

If the loan period is extended from 9 years to 10 years, the installment decreases by only 8%. A very similar situation also applies to the higher-value consolidation loan (USD 50,000).

Impact of extending the loan repayment period on installments and overheads


The information from the table above shows that with repayment periods increasing, debt breaking into more installments, it is less cost-effective.

The cost of increasing the number of installments remains the same, while each subsequent change results in a smaller decrease in the monthly payment. The same relationship can also be seen for other installment loans (e.g. cash loans, car loans, and mortgage loans).

The analysis suggests that the consolidation loan holder should not always strive for a maximum extension of the repayment period. Such a solution is beneficial for the bank (due to the higher total cost of credit), but it does not have to prove profitable from the borrower’s point of view.

The main purpose of a consolidation loan should be to reduce the monthly financial burden to a level that is acceptable and safe for the debtor.

If the amount of installments during consolidation lasting e.g. seven years suits the bank’s client, then it is worth considering whether spreading the debt over the following years (resulting in an increase in the cost of credit), indeed you are a good idea.