There are many financial institutions in Austria which act as providers of loans. The term loan, or ?kredit? is usually used to refer to a monetary debt, in which the borrower and the lender agree upon a system of redistribution in time of the financial assets. A ?kredit? is usually paid back in regular installments, but this is not always the case. The money received by the borrower from the lender can also be paid back in irregular installments. The ?kredit? naturally comes with a cost, which in economical terms is referred to as debt or interest. It is not the financial institutions alone that can provide loans, or ?kredits?. Other institutions resort to this type of debt contracts, in order to increase their sources of funding. Such contracts are usually known as bonds.



A ?kredit? is therefore a contract between a creditor and a debtor, according to which the former promises to give a sum of money and the latter agrees to repay it in accordance to the creditor's terms.

A ?kredit? can be either secured or unsecured. Secured loans refer to specific types of debt, such as those contracted for housing or auto purchasing. In such arrangements, the money obtained by the debtor in the form of a ?kredit? is used to purchase a property or a car. The loans used for housing purchase are also known as ?mortgage loans?, as the bank or any other financial institution representing the creditor is given a lien on the house until the debtor has paid off the mortgage in full. In quite a similar way, an auto kredit is secured by the car that is to be purchased, whether the car is a new or a used one. The kredit duration is definitely shorter in the case of auto purchase than in that of housing purchase, usually according to the period of useful life for the car in question. Auto kredits can be direct or indirect. The direct kredit refers to the consumers receiving the money directly from the financial institution, whereas the indirect loan means that a car dealership acting as an intermediary between the consumer and the financial institution.

The unsecured loans are available to Austrian consumers under a wide range of marketing packages. An unsecured kredit may refer to credit card debt, a bank overdraft, corporate bonds, a personal loan, etc. The interest rates for an unsecured kredit may not be regulated by the Austrian law and they vary according to each lending institution.

A private loan, or ? privatkredit? is widely available among Austrian financial institutions, and it represents a convenient option for financing higher education. Once again, it is the financial institution that sets the interest rates for the privatkredit, based primarily on the risk posed by the borrower of not being able to pay off his/her debt in full. The buying factors of a ?privatkredit? include the interest rates, which may be different during the education period and after the student has graduated; incentives, which depend mostly on each individual's payment record; payment options, and origination fees.

The varied offerings of financial institutions in Austria give prospective debtors a wide range of choices when choosing a kredit or a privatkredit.