What are the real loan costs?

When seeking financial support, we usually decide to take out a loan. Housing and consumer loans are the most popular. Among the latter, cash, car, student and other loans are taken. In turn, entrepreneurs use working capital loans and investment loans. However, there are so many banking products that it is easy to get lost, especially if you do not have much knowledge in banking and finance. One of the issues that raises the most questions is the actual cost of the loan.

Actual loan costs

Actual loan costs

The actual cost of the loan is primarily interest, as well as other fees and commissions. We usually pay the most attention to interest when taking out a loan. The loan interest rate is set by the bank and is expressed as an annual interest rate. Pursuant to the provisions, the interest rate may not exceed four times the lombard rate, its amount is decided by the National Bank. Added to this are credit insurance costs. The insurance does not apply to all loans, it is most often found in the case of housing loans as insurance for missing own contribution. The cost of insurance can often be renegotiated after the first years of loan repayment.

The actual costs of the loan also include additional costs such as the preparation fee, i.e. the amount for examining the application, as well as the commission for granting the loan. The commission can be added to the loan amount, thanks to which the borrower does not have to pay this one-time fee when taking out the loan, thus reducing the initial costs. The cost of a home loan can also include the cost of real estate valuation, although sometimes a bank evaluates a property at its own expense. The real costs of the loan do not include account maintenance fees, costs related to securing the loan, or all fees resulting from failure to comply with the loan agreement.

What affects the cost of the loan?

What affects the cost of the loan?

The loan interest rate as well as any additional costs result from many factors. Some are dependent on us, others are beyond our control. Such elements include loan collateral provided by the borrower, as well as its credibility. If the bank’s client has high credit standing, he is more likely to negotiate terms and reduce at least part of the costs. In addition, the cost of credit is influenced by elements such as inflation, unemployment, competition among banks and financial companies, interest rates and many others.

How do you check the actual loan costs?

How do you check the actual loan costs?

At the stage of comparing the offers of individual banks, calculators that calculate the total cost of the loan will help us. Such calculators can be easily found on the internet. Of course, the amounts they calculate are indicative and not fully accurate. Ultimately, when deciding to submit a loan application, you must ask your credit advisor very carefully about all the costs. It happens not once that the bank employees do not mention certain fees, so it is worth being very inquisitive. Taking a loan for a very large amount, e.g. a mortgage, you can ask for a lawyer who specializes in finance and banking. Such a lawyer will analyze the available options and tell us which solutions will be the most beneficial.

Direct payday lenders -Direct payday lenders online: high approval rates

Each bank offers its customers personal loans or consumer finance. The customer is looked after at his branch office, can apply for a loan on the spot and, in conjunction with his bank advisor, continue the classic banking business. But these services are not offered free of charge; even if the customer does not receive a direct invoice, the fees will be added to the personal loan. Fees, which – if the consumer decides on an online loan – are no longer payable.

Because the automated application ensures of course for cost savings. A cost-saving, which – with direct banks – is passed on directly to the customers. Direct banks only communicate via the Internet or over the telephone. Banking can be done at any time of day or night.

The direct banks also save on the branch network – there are no more branches. All these are reasons why the online loan is much cheaper than the classic financing from the bank. The application has also been simplified. The consumer is guided step by step through the areas.

Direct payday lenders online: high approval rates

The borrower can close maturities of up to 84 months, possibly up to 120 months. Online payday loan has no purpose. While the banks advertise again and again with real estate financing or car loans, the classic online loan is not earmarked. This means that the borrower is free to dispose of his money; proof of what the loan amount was used for is not required.

Of course, the consequence of this is that it mainly comes to a variable interest. The interest rate is also based on the creditworthiness of the customer. If the borrower has a good credit rating, he receives better terms; However, if the credit rating is bad, the bank offers a higher interest rate. But the consumer has a certain influence on the conditions. So he can specify a second borrower, so it comes to an automatic increase in household income. However, the person must live in the same household as the claimant.

Furthermore, the borrower can also assign the typical collateral. These are capital-linked life insurance policies, fixed investments or occupational disability insurance. Such collateral is definitely cheaper than the residual debt insurance, which is repeatedly advertised by banks. The residual debt insurance increases the effective annual interest rate.

Good to know: you may try https://www.onepayday.com/ for online payday loans direct lenders!

If the consumer chooses an online loan without a purpose, the assignment of salary or wage claims is agreed. If there is a purpose – so the consumer decides to buy a car loan because he wants to buy a new car – the vehicle represents safety. This is sometimes the reason why earmarked loans have a lower interest rate.

High data security

Many consumers reject online loans because they are afraid of data misuse. Finally, customers need to provide very personal information when they want to apply for a loan. Above all, the question of what economic conditions prevail, is not gladly answered on the Internet. Above all, because of repeated mention of security holes or hacker attacks.

Of course, banks are taking care of it: banks today use the SSL protocol; There is hardly any other safety precaution that is more effective. The SSL protocol guarantees the encrypted transmission of the data. Only if the appropriate software is available, the receiver can access the transmitted information. The identity of the server is also saved. Again and again, so-called algorithms are played through, which check the server and make sure that no security breaches can occur at all. But how can the consumer know that his data is encrypted? He has to make sure that the domain name of the bank is “https” and not “HTTP”.

But what happens when data misuse actually occurs? Here, too, the banks have already taken precautions and activate the second stage of the security precaution. One variant is the PostIdent procedure. The documents sent to the direct bank must contain a coupon. On the section, the postman notes that he has identified the identity of the customer. Consumers must, therefore, be able to present an official photo ID confirming their identity when they bring the documents to the post office.

Compare the annual interest rate

Collateral and guarantees ultimately ensure that the bank approves the loan application at all. However, it is also important to compare the effective annual interest rates in advance. Only the effective annual interest rate can – in conjunction with the chosen term – at the end of the information, whether it is an expensive or cheap loan offer. The effective annual interest rate consists of the so-called nominal interest rate and the ancillary costs (account maintenance expenses, processing fees). The advantage is that you can find credit comparison portals on the internet that give a quick overview of which banks have the best offers. In addition, consumers also get an overview of whether special repayments or installment breaks are possible.

Good to know: There is a cost limit for the prepayment penalty!

The bank may claim the early repayment penalty if the consumer – before the end of the term – repays the loan. Banks may charge a maximum of 1.0 percent of the outstanding balance, provided that the term is less than one year. If there is an even shorter duration, the limit is 0.5 percent.

The online loan – a step-by-step explanation

The online loan - a step-by-step explanation

1. Determine your credit needs

Before you submit the loan application, you should answer the question of what your actual loan requirements are. Do you want to realize projects – such as the dream holiday – or buy a new car or are they sometimes unforeseen bills that have led to financial bottlenecks?

2. Think of the purpose

Of course, if you are renovating or buying a car, you should also consider loans that have a purpose. Assigned loans are much cheaper, so if you do not need the money for free use, it may be advisable to apply for end-of-life funding.

3. The household bill

Create a household bill. List your regular income and actual expenses. You should also include special payments, such as Christmas or holiday pay, sometimes including child benefit, in the list. It is therefore advisable to use the statements from the past four to nine months so that you can get a good overview of your finances. A household bill not only helps you to determine which loan amount you can afford at the end but also shows the bank what economic conditions exist.

4. The credit comparison

Before you decide on an offer, make a credit comparison. In the beginning, you do not have to enter any data; it is enough if you specify the desired loan amount, the intended duration and sometimes the intended use. You will receive an overview of which loan offers are currently available within a few seconds. However, the offers are presented Harris-neutral. Only then, when you make an application, the Harris query follows.

5. Make the application

You have found the perfect offer? Enter your personal data, add documents – such as the household bill – and get an individual quote. Here already first deviations may be possible. The bank determines the conditions based on the submitted data; Depending on how good or bad your credit rating is, the conditions change in the further process. Specify a second borrower who lives in the same household to improve conditions. Sometimes you can also report a guarantor; the guarantee also ensures improved conditions.

Attention: The indication of the interest rate is subject to a legal regulation!

The interest rates must – according to PAngV – be specified in such a way that 2/3 of all customers also receive the stated conditions. This facilitates the credit comparison and minimizes the risk that the customer will fall for so-called “lock offers”.

6. The application examination

Did you accept the individual application, were identified via the PostIdent process and passed the final exams? The bank agrees to the loan application and worries later in the payment of the requested sum.

7. The payout

If the bank has approved the application, the money will be transferred to your specified current account within seven working days.

If you have opted for a loan, but after a few days you are unsure whether signing the contract was a good idea, you can cancel the contract within 14 days. Please note that you can only withdraw from the contract in writing. You do not have to give a reason! If you have already been paid the money, you must repay the loan amount.