Outgoing borrowers make an interest rate comparison to find loans with low interest rates. Decisive for the amount of the credit costs are the effective annual interest rate and the term. Consumer loans are granted in Germany only at fixed interest rates, which remain unchanged throughout the term. For real estate loans a variable interest rate is possible, but unusual.
What does the interest rate depend on?
The actual bank, where a customer takes out the loan, has a major influence on the level of lending rates. Some financial institutions give all consumer credit at an identical interest rate. Most lending banks require varying levels of lending, depending on their term. They offer loans with low interest rates mainly for medium term contracts. With a very short repayment period, they have to divide the lending costs into a few years, so that they increase the annual percentage rate of charge.
In the case of an above-average maturity, on the other hand, the risk of default increases. In addition, the refinancing of the loans granted can not be planned with the actual costs in the long term. With few exceptions, financial institutions lend out low-interest loans when the maturity is at least three years and not more than seven years. In the case of a credit-based interest calculation, the interest amount also depends on the creditworthiness of the specific applicant.
For their classification, banks either use only the score of private credit or in addition to other information resulting from the loan application. To ensure that the creditworthiness value for German credit protection does not fall, loan seekers identify requests for the personal interest rate as a condition request. They also avoid paying more than one loan within a short period of about half a year. Even superfluous credit cards have a negative effect on the score value and should be returned.
Add-on benefits such as an immediate loan decision or immediate payment are not available to loan seekers who want to take out a loan with low interest rates. It is understandable that the bank requires an interest surcharge for these additional services requested by the customer. It is worth considering whether the loan offer with the lowest interest rates and a rigid repayment scheme is actually cheaper than a loan with a slightly higher APR and partially flexible repayment options.
Loans with discounted interest
In the case of traditional consumer credit, the bank does not inquire as to the purpose but pays the requested money for free use. In addition to these exist offers for loans with little interest and earmarking. These are often for the purchase of a car. Regionally-oriented local banks and savings banks also offer loans at reduced rates for renovations, refurbishments and beauty repairs, provided their borrower commissions a local craftsman to do the work.
By far the cheapest rates offer car dealers and some other dealers in the context of a zero-percent financing. However, these loans with low interest rates are not always the cheapest overall solution dar. Especially when buying a car, vehicle loans from independent commercial banks are often associated with only slightly higher interest rates than the car loan. At the same time, the borrower has the opportunity to negotiate a substantial discount when buying a vehicle if the financing is not provided through the dealer.
For purchases, the selling price in stores that offer zero-percent financing is often higher than a competitor’s that does not allow installment payments. As a result, low-interest external loans coupled with the lower purchase price are often cheaper than a dealer’s free credit.
Unusual offers and private credit
Taking advantage of a credit card’s installment feature is one of the most expensive types of credit. However, when you pay in full on your monthly statement on the due date, card payments offer you the option of free credit for a short period of time. This is especially true for the cards where the issuer has extended the interest-free payment term by one month, depending on the debit date, up to eight weeks. Bank customers paying little attention to interest usually do not use the repayment credit. There are also exceptions for this rule, as individual financial institutions charge no interest for a negative balance of a maximum of € 500.00.
Some time ago, a financial institution advertised an interest-free loan of € 1,000.00. If general interest rates remain low, similar bids from other banks are expected. These are undoubtedly smart advertising measures, because the actions meet with a keen media interest. The borrower can apply for a free loan. Through organized lending between individuals, low-interest loans are also available to low-credit applicants.
Whether a personal loan or a bank loan is cheaper, can be determined by the desired amount and the preferred term for each individual case in a credit comparison.