How to get a serious and cheap loan!
Taking out a loan – that’s no problem with creditworthiness today. The providers – whether classic branch banks or online banks – outdo each other with offers, thanks to the low interest rate phase. Nevertheless, you should not access blindly, but compare exactly.
Because there are big differences in terms, not just in interest. Especially with larger loan amounts and longer terms, supposedly small cost differences over time make up considerable amounts.
The loan comparison is therefore worthwhile. We would like to give consumers some useful tips on what to look for when taking out a loan in order to really get cheap and tailor-made financing.
Overview of useful tips for borrowing!
- Affect the amount of the monthly loan installment
If you want to take out an installment loan, you can usually choose the term in addition to the loan amount. There is a connection between the loan amount, term and rate. If the amount is fixed, the rate decreases the longer the term – and vice versa. By “stretching” the duration of the borrowing, the rate can be influenced in such a way that it becomes sustainable. Of course, this only works to a certain point, which the banks are willing to accept. This time can be determined, for example, using our Fine Bank credit comparison calculator.
- Compare effective interest rate
When comparing credit, it is the effective interest that counts, not the nominal interest. In addition to the interest costs, the effective interest rate also takes into account other cost components of the loan. It therefore enables the “correct” comparison. The effective interest rate must always be stated for consumer loans.
- Residual debt insurance: often unnecessary
Residual debt insurance is often offered when borrowing, which incidentally is usually not taken into account in the effective interest rate. The insurance is intended to ensure loan repayment in the event of unfavorable life events (death, illness, unemployment). In the case of manageable loan amounts, this can be dispensed with if there is sufficient wealth. Because insurance means additional costs that make the loan unnecessarily expensive. These insurance policies are not essential for the approval of the loans.
- Don’t bet on dubious offers
Anyone who urgently needs to take out a loan in order to solve a liquidity problem despite having “bad” creditworthiness, is happy to rely on loans without or despite Credit Bureau, but with such loans you should take a look twice. Many offers are not serious and if they are mostly overpriced.
Take out a loan from the branch bank or online bank?
Those who wanted to take out a loan almost always had to go to a bank branch. This has changed fundamentally since the advent of direct and online banks. In the consumer credit business in particular, it is common today to request loans via the Internet. Even with construction finance, online processing is now possible, although classic borrowing is still popular here.
There are good reasons for preferring the online route. It is simple and convenient, possible at any time and from any location, and above all it is very often cheaper than at the house bank. Online and direct providers do not have to maintain expensive branches and have particularly lean processes. This enables them to save costs and pass these benefits on to customers. However, there is no credit advice from these providers. In the meantime, traditional branch banks are also offering their loans online, sometimes even cheaper than in their own branch.
However, the branch bank does not always have to be more expensive than an online offer. For banks with low-risk customer structures or for special promotions, a branch offer can also pay off. This should also be considered when making comparisons.
The institutes, regardless of branch or online bank, may no longer charge processing fees. The Federal Court of Justice decided this in 2014. For consumers, for example, if you take out a loan amount of $ 20,000, you will receive this 100% and not just $ 19,400 as before. The rest was called the processing fee.
Installment loan, car loan, overdraft loan – which loan makes sense?
There are different types of credit, each with typical characteristics. At this point, we would like to briefly discuss the most important forms of credit – apart from construction loans:
- Installment loans: These are loans that can be taken out for different purposes. For purchases, debt rescheduling or the fulfillment of wishes. They have a fixed term and a fixed interest. The repayment is made in constant monthly installments. This makes the installment loan very easy to calculate.
- Car loans: They are a special form of installment loans, especially for car financing. The car serves as security, making the car loan cheap. Merchants often even offer zero percent financing – but then without a cash discount.
- Overdraft facilities: They allow the checking account to be overdrawn up to the granted limit. Account holders can freely decide whether and for how long they use the overdraft facility. There are no fixed repayment obligations. Overdraft facility is convenient, but also expensive. It is only suitable for short-term payment bridging. With longer terms, the installment loan is the cheaper alternative.
- Call credits: They are a combination of installment credit and overdraft. As with the “overdraft facility”, there is a credit line that can be used at any time. When used, however, there are fixed repayment obligations as with the installment loan.
Watch out, trap!
Many consumers fall into the debt trap with an overdraft facility at their house bank. What most people don’t realize is that interest rates are very high compared to an installment loan. In addition, you can quickly lose track of the repayment, since no fixed repayment rate is defined. Anyone who has already fallen into the dispo trap should consider rescheduling in the form of an installment loan.
What requirements a borrower must have!
Anyone wishing to take out a loan must be of legal age and have a permanent place of residence in Germany . In addition, creditworthiness is mandatory for borrowing. Creditworthiness or creditworthiness refers to the ability and goodwill of the borrower to service the loan properly and to make the payments on time.
Each bank carries out a credit check. It is all about the income situation and the economic situation. After deducting living expenses and other obligations, enough of the income must be left to pay the loan installments. This is usually checked with a household bill.
Non-cash collateral is unusual for normal installment and overdraft facilities. An exception only applies to car loans. Here the vehicle often serves as security. The Credit Bureau query is standard for credit requests. This checks the past payment behavior. Negative Credit Bureau characteristics and a lack of income almost automatically lead to the loan being rejected.
If you, as a consumer, make a loan request to various banks, you can quickly get a worse Credit Bureau score. Our Fine Bank loan comparison calculator enables consumers to make a credit-neutral loan comparison. Because only condition and no credit inquiries are made to the banks. These are anonymous, non-binding and are guaranteed not to have an impact on the Credit Bureau score.
The result of the credit check not only decides on the lending, but also on the conditions. If the risk is acceptable, the loan is granted, but the bank charges risk premiums. The loan can then become significantly more expensive due to higher interest rates.
Take out a loan: how it works!
Borrowing is now largely online. For this purpose, the banks provide appropriate input masks on their pages, through which the loan can be requested in several steps. If you don’t want to ask each bank individually to find a cheap loan, you can use our Fine Bank comparison calculator.
Consumers can see a selection of cheap credit providers based on fewer entries. The comparison is completely neutral and does not affect the Credit Bureau score. In addition, the use of the credit comparison is free and non-binding.
Comparison calculator from Fine Bank: From the loan request to the loan payment
- Comparison calculator: First of all, it is important to enter the loan amount, term and purpose in the comparison calculator. Please be sure to state the correct purpose, since the loan interest differs depending on the purpose. If you are looking for a car loan, for example, you will usually have lower interest rates than a conventional installment loan. This is because the banks see the car as additional security.
- Select bank: After the calculator makes initial suggestions, a credit bank must be selected from which you want to take out a loan.
- Credit check: For the credit check it is necessary to provide further information about the person and the economic situation (e.g. income, expenses, etc.). On this basis, the effective interest rate of the banks is calculated at the end. Because the interest initially displayed in the comparison calculator is for an ideal-typical borrower and serves as a first orientation. The personal interest rate is always determined and calculated based on the individual situation. It can be higher and lower than initially stated.
- Select personal loan offer: At the end, Fine Bank displays all possible personal loan offers. A loan offer can be selected and applied for here. To apply, the credit application and additional information, depending on the bank, must be submitted.
- Payment: The payment is made to the specified current account a few days later after a positive decision by the respective bank.
Finally, we would like to point out that taking out a loan should only be the last option to buy something. But in some cases it is no different and consumers should make sure to get a cheap and reputable loan offer. This is possible using the Fine Bank comparison calculator. The loan comparison takes only a few minutes. The Fine Bank calculator calculates which loan offer is suitable in 60 seconds free of charge and without obligation.