Borrowers who are today looking for an attractive loan product that can convince with low-interest rates and attractive conditions are faced with an incredibly large selection. In addition to the banks and savings banks with a fixed branch system, the borrower can now also choose from the offers of numerous online and direct banks, credit intermediaries and financial service providers. The loan providers on the market are just as different as their financial products. Due to the large variety of offers, borrowers should be particularly thorough when comparing and carefully check the various loan offers with regard to their providers and conditions.
In the online area, in particular, there are many loan providers who lure with cheap loan offers. Due to the different options for structuring the term and amount of the loan, the form of repayment, interest conditions and possible uses, there are sometimes enormous differences between the individual offers. Actually, all providers on the Internet today offer cheap loan offers due to the absence of a fixed branch network, a large number of employees and less administrative effort. However, loan seekers should never neglect the possibility of loan comparison and should definitely use a loan comparison on the Internet. Numerous financial portals now support the borrower in the objective and quick comparison.
Compare loan providers – This is what to look for in the loan offers
When comparing several credit providers, there are sometimes significant differences between the individual offers with regard to the individual conditions. Especially in the area of interest rates, borrowers can quickly make big differences by comparing them. Borrowers who want to secure a low-interest rate on a long-term basis should above all be able to differentiate between target and effective interest. The distinction between debt and effective interest is particularly important since the debit interest is only an adjusted interest rate. The borrowing rate does not take into account the bank’s processing fees or the borrower’s individual loan requests.
On the other hand, these are recorded in the effective interest rate so that the effective interest rate is higher in practice. The effective interest rate depends, for example, on the term, loan amount, repayment and the creditworthiness of the borrower. A theoretically favorable loan offer that advertises with a low-interest rate does not necessarily have to be the cheapest. Since the amount of the effective interest rate is variable, the borrower has the option of exerting a significant influence on the actual amount of the effective rate, above all via the credit rating. The creditworthiness is influenced by the borrower’s income on the one hand and by the borrower’s Schufa information on the other.
Borrowers with a high income and a positive Schufa can get the best interest in practice, the same applies to borrowers who opt for a short term and a low loan amount.
The importance of term and loan amount
Loan providers do not offer the same options when designing the term. In general, the term should always be adapted to individual requirements. With regard to the amount of the effective interest rate, the meaning of the term and loan amount cannot be dismissed out of hand. Borrowers who opt for a short term and a low loan amount can benefit from a low effective interest rate, which can be attributed to the lower risk in lending and the lower capital commitment for the bank. Borrowers who claim a short term also always run the risk of a high liquidity burden.
Short terms are often synonymous with high rates and high credit risk. For this reason, short terms are not recommended for low-wage earners. Borrowers with a low income should have a long term. Long terms offer a lower liquidity burden, but since the remaining debt is reduced more slowly, the borrower can expect significantly higher borrowing costs. Today, credit providers offer the borrower the freedom to structure the term and loan amount within a certain framework.
The repayment options depend on the loan provider
The repayment options always depend on the provider and the form of credit. Numerous banks and credit institutions today offer the borrower the option to repay installments. The repayment of installments is characterized by the fact that the remaining debt is reduced at constant intervals or the repayment is made at a constant amount and at identical intervals. The installment repayment offers the borrower a constant liquidity charge so that the borrower can plan the repayment well and reduce the credit default risk enormously.
For this reason, the installment repayment not only offers advantages for the borrower, but the installment repayment is also considered very secure for the lender. The first installment can be recorded and booked after a short time. In addition to the option of repayment in installments, borrowers can often also use annuity repayment. Annuity repayment is mainly used today in the area of real estate financing. Annuity repayment offers the borrower a constant repayment.
A constant annuity, made up of repayment and interest, is paid here. While the repayment increases with the term, the interest burden on the borrower decreases. Since the constant is always the same, repayment can also be planned very well here. It is not uncommon, especially in the area of car financing, to grant the option of final installment repayment. The final installment repayment offers an incredibly low liquidity burden during the term. The borrower only has to repay the interest on the loan taken out during the term. However, the interest is calculated over the entire term from the net loan amount, so that high borrowing costs arise for the borrower. Only at the end of the term will the loan amount be repaid either in several installments or as a one-off payment.
The loan application
Credit providers on the Internet now enable fast and free loan applications via the Internet. Thanks to the electronic data transfer, the application can be made in just a few steps. With an application form, the borrower can take the first and most important step to the loan. In the application form itself, information about the credit, the duration, and use must be stored, as well as information about the person and the credit rating. The bank’s subsequent check will determine the creditworthiness and grant or refuse the loan.
In the case of loan approval, the credit contract is already transmitted, which can then be completed and signed by the borrower. With the postal transmission to the relevant credit provider, all necessary steps on the part of the borrower are fulfilled. Upon receipt of the loan contract at the bank, the payment of the loan amount is subsequently initiated.
Compare loan providers and their offers and save a lot of money
The use of a loan calculator when comparing loans is essential today. The use of a loan calculator enables the borrower to determine the best loan offer taking into account individual information. By taking into account the loan amount, term, repayment, income, etc., the borrower can quickly and decisively limit the search for the best offer and filter out the best loan offers. The offers that best meet your own requirements can be compared below. Choosing the loan provider with the lowest effective interest rates makes sense because this way the total loan costs can be reduced enormously.