10 Tips for credit comparison

The supply of credit has rarely been as great as it is right now. It is therefore all the more important for consumers to compare the conditions with each other in detail. Depending on the loan amount, a comparison can save several hundred euros. A credit comparison on the Internet allows a large number of offers to be compared with each other at a glance. In addition to the most favorable interest rate possible, consumers should also pay attention to a number of other points.

1. Term and purpose of the loan

Most banks offer various types of loans. In order to find the right variant, it should be clear what the loan is intended for and what term is to be used. A framework loan is suitable, for example, for bridging short-term financial bottlenecks. Those who want to buy a new car often find the most favorable conditions with a car loan. For a renovation or modernization of the own property special loans are also offered. Then there is of course the classic installment loan which is disbursed for free use and thus for all purposes is available.

2. Individual requirements of the borrower

In a comparison should be noted that there is not the one cheap loan does not exist. The assessment of whether a loan is worthwhile always depends on the personal requirements of the borrower. Consumers with a high income, for example, have a much better chance of getting a low interest rate. The Schufa score and the professional situation also affect the possible conditions.

3. First check with the house bank

It is quite advisable to first ask your own bank about the conditions of a loan. The offer can then be used as a reference point for a loan comparison. Long-term customers are often given preferential treatment. Thus, the loan is possible even if not all acceptance criteria are met.

4. Effective interest rate vs. Nominal interest

When making a comparison, attention should be paid first and foremost to the effective annual interest rate. This already includes all important costs and is therefore much more meaningful than the nominal interest rate. Banks are obliged to state the annual percentage rate of charge in all loan offers.

5. Additional costs

It should be noted that the effective interest rate does not take all costs into account. This includes, among other things, commitment interest if the loan is not disbursed immediately. Costs for residual debt insurance are also not included in the APR. This is because such protection is not mandatory. However, it happens again and again that banks approve the loan only on conclusion of a residual debt insurance. It is better to refrain from such offers.

6. Representative example as a guide

The majority of loans are offered with an interest rate based on creditworthiness. The banks then only quote an interest margin. The actual effective interest rate is only apparent after the creditworthiness check. The representative example, which must be provided with every credit offer, serves as a guide. The conditions mentioned in the example must be available for at least two thirds of the customers.

7. Request personal information from Schufa

It is advisable to inquire about the data stored at Schufa before making a comparison. Consumers can request a free self-report once a year. Due to the large number of data records, errors in the Schufa data are not uncommon. These can then be corrected before the application is submitted. In addition, the Schufa score, which is taken into account in the effective annual interest rate, also emerges from the self-disclosure. Borrowers thus know exactly how their creditworthiness is assessed by the banks.

8. Interest rates independent of creditworthiness are easier to compare

The comparison is easier at first glance with interest rates that are not dependent on creditworthiness. Here, all borrowers receive the same interest rate regardless of income. It should be noted, however, that this option is not always the most favorable one. Consumers with a very high income and impeccable Schufa can usually benefit more from creditworthiness-dependent interest rates.

9. Free unscheduled repayments are important

In principle, loans can also be repaid early. However, in this case the banks are entitled to a prepayment penalty of a maximum of 1.0 percent of the outstanding loan amount. In the meantime, however, many banks are waiving such a fee and allowing unscheduled repayments free of charge. This allows borrowers to remain flexible and invest unforeseen income in the loan. In the event of early repayments, interest already paid will be refunded.

10 Additional services of the banks

There is a great deal of competition on the credit market. Therefore, some banks still offer various additional services. This includes, for example, a deferred payment for the first installment. It is also practical if an installment can be suspended free of charge in the event of financial bottlenecks. The residual debt insurance is another additional service, which, however, only makes sense in the rarest cases. On the one hand, such policies are very expensive and on the other hand, there are a large number of exclusions in the conditions.

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