Cheap Loans From The Net

Online loans are enjoying increasing demand from consumers. No wonder, the loans from the Internet usually offer more favorable conditions and are approved faster.

As with all monetary transactions, there are a few things to consider when taking out an online loan. The simple equation: cheapest interest rate equal to the best loan is far from always working.

Online loans – this is what consumers need to look out for.

Online loans - this is what consumers need to look out for.

Trust is good, comparison is better – this also applies to the search for the cheapest online loan. Every consumer should take a few minutes and try a credit comparison calculator, this is the only way to get an overview of the confusing credit market.

The banks work with all tricks to make their loan offers appear as attractive as possible. A common method is advertising with “starting interest”, also known as window interest. They mark the bank’s best loan offering, but in practice it is only given to customers with excellent credit ratings or subject to certain terms regarding terms and loan volume. Steer clear of providers who are already charging fees for the loan offer. Anyone who has a negative credit entry should refrain from further borrowing and better take care of paying off old debts.

Reputable credit providers have nothing to hide and offer both a proper imprint and their general terms and conditions on their website. In any case, there should be a way to get in touch quickly, for example through a telephone service or at least an email address. Even if it is difficult, you should read through the terms and conditions and print them out. This is always better than getting annoyed later about the famous hooks in the small print.

Beware of additional services and unfavorable conditions

Beware of additional services and unfavorable conditions

It is better to avoid all banks that link their lending to additional services such as life insurance or residual debt insurance. The benefits of these services are usually not economically related to the additional costs.

Every loan agreement should offer the option of early repayment in the event that the borrower in the meantime comes to money. According to the new consumer credit guideline, the bank may charge a maximum of 3% of the loan amount as a prepayment decision, but some banks take more or offer a completely free special repayment right.

Explanation of the forward loan

The forward loan is a loan type of annuity loan. With such a loan, the amount of the installments remains constant over the course of time. The installments consist of the two components of the interest component and the repayment component. Since the amount to be repaid is very high at the beginning of the loan repayment, very high absolute interest initially arises with a constant interest rate. The first installment is therefore composed almost equally of a repayment installment and an interest payment.

As the absolute amount of interest becomes lower as the repayment progresses, the repayment amount can be increased each time in order to arrive at a consistently high sum of the respective installment. At the end of the repayment of such an annuity loan, the repayment balance is very low, which is why there is no longer a high interest amount. Thus, the last installment can consist almost entirely of the repayment debt, while the interest amount is close to zero.

Securing favorable interest rates

Securing favorable interest rates

One problem in the financial world is that interest rates fluctuate enormously in some cases. If you want to take out a loan at a later date, you will often face the problem that interest rates will be higher than they are currently. The alternative would be to take out the loan earlier than you need it or to be able to pay the installments back.

The forward loan solves this problem in a very elegant way. It is possible to conclude the contract early and to secure the current interest rate when concluding the contract. However, the loan is not paid out immediately, but only after a delay, also contractually agreed. For some banks, this can be up to 5 years. From this fact, the name is ultimately derived, which can be translated as a forward loan or loan in advance. The forward loan is usually taken out for large-scale projects, such as building a house.

A risk to the credit institution

A risk to the credit institution

Since the development of interest rates is unpredictable, the forward loan represents a certain risk for every credit institution. In order that this risk does not become too great, they pass some of it on to the customer. This is done by contractually setting a fixed interest rate, but this is a slightly higher interest rate than would be the case with a loan that would be paid out immediately. This results in predictable but automatically higher costs for the customer.

There is also a certain risk for the customer. Particularly unlikely given current economic developments, but it cannot be completely ruled out that the future interest rate at the time the loan will be paid out will be lower than the contractually specified interest rate, including the risk premium. The level of the risk premium is estimated by credit institutions on the basis of the current economic development and increased over a longer forward period.

Cost reduction through non-acceptance compensation from the credit institution

Cost reduction through non-acceptance compensation from the credit institution

The higher interest rate for a forward loan in 2015 was 0.58% above the interest rate applicable at the time. Since the economic development is unpredictable over long periods, it can happen in special cases that the interest rates fall very sharply and the forward loan is no longer worthwhile for the customer. In such a case, he has the option to withdraw from the contract, but must pay the credit institution a non-acceptance fee.

Basically, this is nothing more than compensation for breach of contract. Ultimately, it can happen that the interest rates on the loan payment date fall so far that the interest rate of a spontaneously taken out loan plus the non-payment fee is still worthwhile. The amount of the compensation is usually calculated according to the rules of prepayment penalty, but if the interest fluctuates strongly when the contract is concluded, a flat rate for non-acceptance compensation, which is also contractually agreed, is worthwhile.

Cheap Loans for Officials, Academics and Public Service Employees

 

Security is the top priority in the lending business. Every bank wants financially strong credit customers who have secure employment relationships and can easily deal with the repayment. Officials come closest to this ideal.

They have an above-average credit rating and are rewarded with preferential terms by the banking industry. A special financing, the civil servant loan, was even developed for these “premium customers”. This is final financing that is linked to a capital life insurance.

Special features of the official loan

Special features of the official loan

The official loan offers some advantages that ordinary borrowers cannot claim for themselves. The civil servant loan has a comparatively large credit line, it is based on the borrower’s income, the maximum limit is approximately two net annual incomes. The borrowers only have to shoulder a small monthly charge; in the case of final financing, the repayment rates consist of a low interest component and contributions to the life insurance.

The insurance policy includes a guarantee amount that corresponds to the volume of the loan and is paid out at the end of the loan term. The borrower can use the income from the capital life insurance to repay the loan in one sum. This model offers benefits in monetary terms, after all, the insurance premiums bear interest and thus generate profits for the policyholder. In the best case scenario, the insurance company even generates surpluses that flow proportionately into the pockets of the insured.

No residual debt insurance is required to secure the official loan, the capital life insurance would step in in an emergency, for example if the borrower dies, and the loan will be paid off in full. In conjunction with the secure job and the high income of the civil servant, the life insurance provides maximum credit security. As a result, the banks are satisfied with comparatively low lending rates and grant extremely long terms of 12 to 20 years.

Compare admission criteria and conditions

Compare admission criteria and conditions

The banks are completely free to choose who they give an official loan to and who they don’t. Some admit only civil servants for life, the others also probation officials or even academics and civil servants. Anyone who belongs to one of the groups mentioned should definitely try to get a civil servant loan.

The credit comparison is a must, everyone should take the time and check the credit terms of the top providers, it is worth it. Due to the usually long term, small interest rate differentials can amount to several thousand dollars.

So you can reschedule a car loan.

It happens again and again: after a long search, you have found a car loan that roughly corresponds to your own expectations, taken it, bought the vehicle, only to get very annoyed some time later because you discovered a much better offer. In this case, however, you may be able to reschedule your car loan. However, this is not always possible.

Debting a car loan: What exactly is debt rescheduling?

Debting a car loan: What exactly is debt rescheduling?

Before it is explained in detail how to reschedule a car loan and when it only makes sense at all, it should be briefly mentioned what is actually a rescheduling, since this word is used differently in everyday language than it is used in technical jargon. Debt restructuring means early redemption with the help of another. You take out a loan and use the money to completely repay an existing loan. The legal mechanism through which this works is the so-called special repayment, which can be found in every installment loan agreement that is concluded in Germany.

Debting a car loan: when does it make sense?

Debting a car loan: when does it make sense?

From this explanation it can already be concluded that it is not always sensible to reschedule a car loan: You should stay away from this process if you do not get any financial advantage from it. If it is actually more expensive to pay off the new loan than simply to keep the old one, it is better not to make any changes. However, if you have a clear advantage in doing the debt rescheduling, you should do so because it not only keeps you back more money, but also improves your creditworthiness. To do this, it is important to find out all the important fees and interest in advance and to calculate exactly.

Debting a car loan: The problem of your own bank

Debting a car loan: The problem of your own bank

It is usually not very difficult to get a loan for a debt rescheduling. However, it is an exception if it is your own bank. This presumably generally prohibits debt restructuring in the house, because it has a financial disadvantage as a result. From their point of view, some financial institutions have reacted cleverly and allow debt rescheduling, but only with the bank’s instant loan. With this, however, you should not under any circumstances reschedule a car loan, since the instant loan is one of the most expensive loan types.