Of course, you want to take out a loan with low interest rates. Anything else would be economic nonsense with an equivalent product like money.
And what do you pay attention to? The annual percentage rate or the fixed borrowing rate? Do credit terms play at least as big a role for you as the interest rate or are the terms negligible?
We do not present a specific product to you as “the” loan with “the” cheapest interest, but support you with information. Find out why the effective interest rate is the benchmark and what is not included. In addition, which loan terms are even more important than interest rates could be.
Low interest loan – available from any bank
The offer to offer a low interest rate loan could have come from any credit institution. An advertisement that specifically advertises an expensive interest rate as such would probably cost the job for those responsible for marketing. Rather than clarify the question of what is a low interest rate on a daily basis. How can you quickly gain an overview of the market and what else should you watch out for?
Credit comparisons provide a quick, superficial comparison of what a regular installment loan with low daily interest rates is. Comparing free credit online was almost revolutionary at first. It probably affected interest rates to almost the same extent as the current low key rate. Today, credit comparison on the Internet is more of a daily routine. The effective annual interest rates are compared.
However, not only on the basis of the interest rate-linked listing, but on the representative example. This makes it possible to compare loan offers at “interest rate dependent” for “ordinary people”. The effective interest rate is compared. It includes all financing costs of the bank, just as the respective loan is offered with low interest rates. Special requests, such as optional residual debt insurance, are not included.
Credit terms – often more important today than the effective interest rate
Due to the policy of interest-free ECB loans, the interest level in Germany is at an all-time low. The effective interest rate plays a rather minor role in the average small and medium loan amounts for a regular installment loan. With a good credit rating the bottom line, depending on the term and loan amount, to pay 50 USD more or less, most borrowers could confidently neglect.
A low-interest loan today has to offer more than just a small interest advantage. The focus is on the loan terms. It is important to pay attention to the right to free special repayments of any amount. With serious credit planning, it opens up the possibility of dispensing with credit insurance without taking a disproportionate risk. The bottom line is that around 10 percent of the loan amount could be saved in insurance premiums.
People who love to travel are often short of cash after their vacation. Borrowers often fear January. Insurance contributions and utility bills drain the household budget. A modern credit option promises protection against liquidity shortages. Some providers allow an individual payment break of one month per year to be requested. For many people, surviving stress-free periods of scarce liquidity is more valuable than financing a few USD at lower interest rates.
Purpose – underestimated savings potential
Renovating the kitchen, equipping it with new furniture and appliances is an expensive pleasure even with economical planning. Simply going online, applying for a low interest, 10,000 USD loan for free use would be unwise. The credit comparison of interest rates independent of creditworthiness currently leads at best to an effective annual interest rate of 3.88 percent.
Just a click away, for the purpose of renovation or for new furniture, leads to an annual interest rate of 2.99 percent independent of creditworthiness. In this example, a good USD 100 interest would be saved with a term of 48 months and a loan amount of USD 10,000. Nobody can save faster and more conveniently than earning 100 USD with a click of the mouse.
Low interest rates and weaker creditworthiness – a contradiction in terms?
Weak creditworthiness often disqualifies people from taking advantage of a loan offering with low interest rates in line with the market. The reason for this can be found in the internal credit calculation. An increased credit risk cannot be covered at a low interest rate. Nevertheless, most borrowers have the choice to still qualify for the low interest rate. This is made possible by a solvent guarantor or co-applicant.
The joint creditworthiness of both creditors secures the loan against default risks. The budget bill, when two adequate incomes secure the loan, also works more easily. Overall, the credit is now secure from the bank’s perspective. An applicant’s creditworthiness is no longer an obstacle to granting a loan with low interest rates. As convenient and safe this way may be. Unfortunately, a solvent partner is not always available.
Favorable credit – poor creditworthiness without a guarantor
The real credit risk, in the case of poor creditworthiness, adjusted interest rates without additional credit protection, are always higher than with a good score. Nevertheless, there are savings opportunities again by comparing the offers. Loans with low interest rates can be found optimally despite increased credit risk via Smava.
The credit comparison from Smava shows not only credit offers with the best credit rating. With a delayed credit check, fair bank loans with increased credit risk can also be found. These loan offers are compared with the loan from Smava. Smava offers access to reputable loan offers from private donors within the closed area of the credit portal. Even a loan with low interest rates despite Schufa would be possible in this way.