Lending is not only possible through banks. In addition to financial institutions, retailers grant loans by directly arranging installment payments with their customers. Lending is also possible through the employer and in special cases through the office, as well as directly from other private individuals. In the case of loans from private individuals, a distinction must be made between organized and unorganized loan processing.
Unorganized lending by individuals
Conventional loans from private individuals are granted without organization by friends, acquaintances or relatives. Legally, it is already a private loan if a friend or neighbor helps another at the supermarket checkout with a small amount. In this case, the written conclusion of a loan agreement is superfluous, as soon as possible repayment of the borrowed money goes without saying. If more than minor amounts are to be lent, a written repayment agreement is advisable.
If this cannot be met by the borrower, friends and relatives are usually willing to compromise. Interest is usually not agreed on loans granted by personally known or related private individuals. In the case of very high loan amounts, however, this results in the obligation to pay gift tax. A taxable gift is not the loan taken out, but the waiver of interest calculated on the basis of the average interest.
If, contrary to customary practice, loans are granted by private individuals to calculate interest, the lender must state his interest income in the tax return. A private lender does not have to apply for a banking license, even if he requests interest in individual cases. A prerequisite for the freedom of permission is that the borrower and the lender know each other personally and that the lending does not make a significant contribution to the income of the paying person.
Organized personal loans
Individuals are not allowed to actively advertise a possible lending to borrowers unknown to them, since such behavior is classified as an economic activity that requires approval. Given the numerous requirements for organized lending, non-banks have no realistic chance of being approved. For this reason, licensed commercial banks mediate lending between private individuals. You can register as a lender or borrower on the website of a company.
This bank is also responsible for credit processing so that the members involved do not receive the mutual data. Nevertheless, the decision on the granting of the requested loans is made by private individuals. Each individual loan application can be serviced by a lender or by several private individuals, depending on the amount of the payment required.
A peculiarity of organized loans from private individuals compared to traditional bank loans is that most private lenders take social criteria and the use of the application into account when making their decisions. The interest income of private lenders is subject to normal flat rate tax when settled via the platform.