As a rule, a large number of people can only fulfill their dream of owning a home, car or luxury vacation with a loan. The deteriorating economy is also causing increasing unemployment, which means that numerous households are facing financial difficulties.
Due to the many increasingly attractive offers, the competition between the banking institutions is increasing. An advantage for consumers, but keeping an overview here is not always easy. A previously believed cheap loan can later prove to be a trap. But where are there cheap loans and what makes them so special?
The interest rate and the credit check
A cheap loan depends on several factors. Most borrowers pay attention to the interest rate. This is sometimes crucial whether your choice becomes a bargain. Banks advertise in public through TV advertising, prospectuses, internet, etc. at low interest rates. However, some providers state the normal interest rate, which is not very meaningful. The effective interest rate should always be used for comparisons. Basically, a bank always carries out a credit check on the possible borrower. This also helps to ensure that people with a good job receive a better interest rate than the unemployed or people with a poorly paid job. Furthermore, points such as the number of children, safe job, Credit Bureau entry are used.
The hidden processing fees
For some loans, bank processing fees affect the low interest rate. It can happen, among other things, that a loan that is cheaper in advance due to these fees (generally between 1 and 3 percent of the loan amount) is much more expensive than expected before the contract was signed. Therefore, this aspect should be included in the calculation. Shorter terms usually offer the better and cheaper option for consumers. In the case of longer credit contracts (from 10 years of age), it is useful to find out about the possibility of early repayment, which is not available at every bank or contract or contains high ancillary costs.
Comparison portals on the Internet
The internet offers a good opportunity to get an overview at an early stage. Here are some reputable comparison calculators that highlight the best loan offer. In addition to the choice of the desired loan (cash loan, installment loan, etc.), information such as B. the amount of the loan, term, monthly installments. Most comparison calculator providers are fast and reliable. The effective interest rate must be clearly marked, since it contains the additional costs. The available offers can be used to obtain a better loan contract from other banks.