Individuals are looking to borrow funds from Sparkasse and Co. financial institutions.
In recent times, a survey from loan comparison portal "smava" has revealed that up to ten percent of loan approvals could be affected due to the tightening of lending criteria among the largest private banks in Germany [1]. This tightening could potentially make it more challenging for millions of customers to secure loans for various purchases such as properties, cars, or new kitchens.
The reasons behind this tightening are multifaceted. Inflation, high interest rates, and decreasing real incomes are some factors contributing to the stricter lending policies [7]. Banks are focusing on the payment ability of potential borrowers, giving importance to a good Schufa score, regular income, and a secure job [6].
These general factors influencing loan approval are not exclusive to Sparkasse but are shared by many banks in Germany. They include credit score (Schufa-Score), income and employment stability, debt-to-income ratio, loan amount and repayment terms, collateral or security, business plan (for business loans), and the overall credit quality of the borrower [2].
Sparkasse, however, has a local focus and retail banking emphasis, which can influence its lending criteria. The bank often prioritises personal relationships and local economic conditions, and it specialises in personal and SME lending [5].
The tightening of lending criteria could have significant impacts on the economy, potentially reducing spending and investment. A recent case in point is a lottery winner who could potentially lose their winnings due to the current economic conditions and tightened lending criteria [8].
It is essential to note that the specific approval criteria can vary based on individual circumstances and local bank policies. For detailed information, it is advisable to consult directly with a Sparkasse branch or financial advisor.
Interestingly, every fourth bank in the survey expressed a desire to tighten its lending criteria further. The data from the Bundesbank shows a trend of banks like Sparkasse tightening their standards for loan approval, as observed in the second quarter of this year [3].
Customers of Sparkasse and other banks in Germany can expect interest rates to rise significantly, with an anticipated 8% interest in Q3 of 2025 [6]. There is an average of around three percentage points difference between the cheapest and most expensive loan offers [9].
In conclusion, the tightening of lending criteria by banks in Germany could present challenges for potential borrowers. It is crucial to understand the factors that influence loan approval and to seek advice from financial experts to navigate these changes effectively.
- The tightening of lending criteria among banks in Germany, such as Sparkasse, could lead to increased difficulty for customers in securing loans for various purchases, potentially impacting the economy by reducing spending and investment.
- Banks, including Sparkasse, are focusing on factors like credit score (Schufa-Score), income and employment stability, debt-to-income ratio, loan amount and repayment terms, collateral or security, business plan (for business loans), and the overall credit quality of the borrower when approving loans, and customers should expect interest rates to rise significantly in the future.
