Consumers in Germany borrow more and more money by installment loan. Last year, according to the German Bundesbank, a total of 105.66 billion euros. This is the highest sum since the beginning of the financial crisis in 2007. According to Bank, consumers are comparing an average of 2.1 loan offers before concluding a loan. In comparison to the amount of available credit on the market, that is a tiny bit less. Those who blindly trust banks have fallen into one of four avoidable traps and are risking paying too much for their loan.
Blind trust towards banks
“Anyone who goes to the bank usually receives exactly one loan offer. That’s almost certainly not the cheapest, “says Honest Lender, CEO of Good Lender. Banks are in strong competition. There are big price differences. Those who do not want to pay too much for their credit should seek and compare offers from various banks. Credit portals like Good Lender help with this. Instead of an offer from a bank, one receives there with a request several offers of different banks. These are created individually for each prospective loan based on their creditworthiness. The portals sort the offers according to the APR, ie the annual credit costs. That helps to find a cheap loan. In 2018, consumers who placed their loan through Good Lender paid on average 2.15 percentage points less interest than the national average.
Assess credit rating by gut feeling
The better your own creditworthiness, the lower the lending rates usually are. Anyone wishing to apply for a loan should therefore reliably check their creditworthiness before the application and if possible improve it. Who google for about “check creditworthiness”, find suitable providers. Some of them, such as Score Kompass, offer the credit check free of charge and as often as required per year. As an alternative, consumers can also obtain credit scores free of charge from credit bureaus such as Bank at reasonable intervals, in the form of a copy of the data (pursuant to Art. 15 DS-GVO). However, the credit bureaus’ assessment is only one criterion when it comes to whether a credit application is approved. A balanced budget and sufficient disposable income also play a major role.
Wrong ambition in repayment
The monthly repayment rate is realistic instead of blue-eyed. For a realistic assessment, the monthly monthly expenses for rent, food and leisure activities are deducted from the monthly net income. What is left can be used for loan repayment. Consumers should not, however, calculate too ambitiously and plan for a financial buffer. Unplanned expenses can otherwise quickly lead to problems with loan repayment. The monthly repayment rate should only be as high as the amount that you can comfortably dispense on a regular basis.
Volatile, incorrect or incomplete information in the credit comparison
In a credit comparison, details make a big difference. Volatile, incorrect or incomplete information falsifies the credit offers. For example, anyone who identifies address or employer data invented during a quick comparison can not be correctly assigned by Bank. As a result, you may receive poorer or no loan offers from banks. If you want to take out a loan together with a second person, you should also state that. A second applicant can contribute to a better credit rating and thus to lower interest rates. It is also worth mentioning what you need the money for. For certain uses, such as buying a car, there are special loans. A car loan is secured about the value of the vehicle. It is therefore often cheaper than an installment loan with free use. To find the right loan and a good interest rate, it is worth consulting. Even credit portals like Good Lender offer this advice. It is either by phone or by e-mail.