Can you recommend a loan calculator
Loans and loans: You can also save on borrowing money
Recognize warning signs
If the bank or savings bank denies you the loan you want, consider this a warning sign. Banks and savings banks also want to do business and do not deny a loan without good reason. However, you should definitely question the reason for rejection and reconsider your economic situation!
Avoid credit intermediaries
Credit intermediaries charge a high commission. This is often not paid directly to the broker, but "co-financed" through the loan. This has disadvantages: In addition to the costs that the bank incurs for the loan, you pay interest on the agent's commission. It is not uncommon for the interest on brokered loans to be comparatively very high.
Lure them into advertisements with "unbureaucratic, problem-free instant loans - even if the house bank causes problems", special care is required. More and more often these credit intermediaries do not even broker expensive loans, but instead, for example, "asset management" and similar contracts that are worthless to the loan seeker. Because the promised service - ie "debt settlement" or "debt management" instead of loan disbursement - is usually expensive and does not help the debtor any further. As a rule, companies are not allowed to provide proper debt advice for legal reasons.
Even if many intermediaries claim that the conclusion of further contracts (such as building society contracts, silent partnerships, various insurance policies) would supposedly make the granting of credit possible in the first place or significantly improve your chances, you should by no means get involved.
Particular caution is required if the alleged contract documents are also sent to you as an expensive cash on delivery item. Usually, instead of the promised loan agreement, the eagerly awaited envelope only contains worthless papers or the request to submit further documents; the high fee is gone and a later loan disbursement is highly questionable.
Be careful with rescheduling
Beware of loan offers that are only granted on condition that you discharge all old liabilities. The melodious prospect of only paying one installment can cost you dearly, even if it may even reduce the monthly burden of rescheduling and consolidating your liabilities. Usually this is only possible by extending the loan term.
The actual profitability of a debt rescheduling can only be assessed by comparing the total burden of the debt rescheduling loan with the outstanding installment obligations for the remaining loans plus the total burden for an additional loan requirement.
Compare the prices
Compare the prices of as many credit institutions as possible. You must not be blinded by small monthly payments. The only meaningful information is the effective annual interest rate, which the credit institutions are legally obliged to disclose. Almost all costs are allocated to the entire term. Make sure you also consider and question special costs that have not been taken into account in the annual percentage rate of charge (for example, a voluntarily concluded residual debt insurance). You should only compare installment loans with fixed terms.
In the case of installment loans with variable terms, the effective annual interest rate is usually lower. However, variable conditions harbor a risk, especially if the general interest rate level rises. Many banks now advertise with interest rates "from" ...%, whereby the criteria for the individual loan interest are very different. Sometimes the actual interest rate depends on the loan term, sometimes on the loan amount and often on the so-called creditworthiness of the borrower, which each bank also assesses according to its own criteria.
In order to find the offer that is most advantageous for you, you have to compare different, individually tailored conditions. Make sure that the maturities are the same, otherwise the indication of the effective annual interest rate is not very meaningful for a comparison. And don't let yourself be put under time pressure: Assert your right to receive a draft contract so that you can read it in peace and only then be able to make your decision.
Be careful with particularly flexible loan types
The offers are often only tempting at first glance: You are granted a high credit line, which, similar to an overdraft facility, you can usually use several times. You can also choose the monthly rate yourself to a certain extent, which gives the impression of particularly great financial freedom. However, there are serious disadvantages: The amount of the minimum rate can climb when interest rates rise, because, in contrast to the installment loan, you have agreed a variable interest rate.
If the rate remains the same despite the increase in interest rates, the repayment of your loan will take significantly longer. Interest rates that look particularly cheap at the beginning quickly lose their appeal when you can see from the small print that this promotional interest rate is only valid for a month or two and then of course is "adjusted" to market developments.
Since the interest charge is determined monthly or at the end of the quarter, it is easy to lose track of things. You neither know how long you will have to pay back the loan, nor how expensive the financing is overall. If you exhaust the limits again and again, the loan history becomes more and more obscure. A framework loan is often the entry into permanent or even over-indebtedness, especially if you also use the normal overdraft facility on your current account.
Beware of loan combinations with endowment life insurance
Loan offers in which the loan is to be repaid at the end of the term (usually after twelve years) via a capital life insurance taken out at the same time are usually much more expensive than a comparable installment loan with pure term life insurance. The disadvantages are obvious:
- The agreed variable interest rate allows the rate to rise as the interest rate rises.
- In addition to the monthly interest rate for the loan, you also pay the insurance premium.
- The interest is calculated from the original loan amount over the entire term, as no repayment has been made in the meantime.
- The loan is only repaid at the end of the term - usually after twelve years - over the term of the insurance. The bank therefore receives a large part of the saved sum insured to repay the loan. If, in the event of a poor development of the surplus participation, the maturity payment is not sufficient to repay the loan in full when it falls due, follow-up financing may be required. So you cannot be sure that in the end you will actually be able to repay the loan in full with the saved sum insured.
- The loan relationship usually lasts for twelve years. It is difficult to plan one's own financial resilience over such a long period of time.
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