Important to the installment loan
- Check special repayments
The installment loan can be shortened at any time by special repayments or returned early. But make sure beforehand if prepayment penalties are due.
- If possible, choose earmarking
Installment loans with earmarking, such as the car loan or a modernization loan, offer high interest rates. Here are more collateral available, which is why the conditions are usually cheaper.
- Play through different scenarios
Use our credit comparison to play through different financing scenarios. This allows you to determine the optimal term and loan amount.
In virtually every area of life, you are offered financing from dealers, agents and others. With such an installment loan, the acquisition costs are stretched over a certain period, you pay constant monthly installments including interest. But whether a installment loan always recommends, depends mainly on the intended use. Your professional group also influences the loan conditions. A credit comparison is therefore recommended.
How to find a cheap installment loan
Installment loans have the advantage that the underlying interest rate is fixed over the entire term. So you can use a loan calculator to calculate in advance how much they will cost borrowing in the end. Since this is sufficient without earmarking, you can use the money as you wish.
However, there are restrictions on the amount of the loan and the maximum duration: installment loans are usually granted between 1,000 and 70,000 euros, with maturities between twelve and 120 months. These choices can be found in the comparison of Financedel. However, before you take out a loan, you should assess the real need correctly. This protects you against excessive interest charges and long-term obligations.
- Shorter terms reduce costs
The longer the term, the lower the monthly rate for the same loan amount. Conversely, this means a higher interest burden, because you pay off the loan only in small, even steps. Note, however, that with maturities over 60 months often interest surcharges apply. The borrowing is not only absolute, but by the higher interest rate also relatively expensive.
- Lower borrowing requirements through equity
Consider whether time deposits will not mature soon or a sale of stock from the portfolio is worthwhile. With all these funds, you increase your cash, so you need to take less credit.
- Special repayments and installment breaks agree
Should you suddenly have larger amounts of money available, special repayments without prepayment penalties are ideal to reduce the credit burden. The installment loan is so flexible that even installment pauses are possible without negative consequences. For example, once a year, the banks give you advance notice of being able to suspend a monthly installment. So you do not risk the termination of the loan even with amusing payment difficulties.
- Check Private credit entries and have them corrected if necessary
The interest rate is fundamentally credit-dependent, so it depends on your creditworthiness. For example, Private credit score values, which are recalculated at regular intervals, are decisive. The more data stored in the Private credit about you, the better. Better in the sense that you already have “credit histories” about you and banks can assess whether and how you fulfill your obligations. Therefore check by a query of your Private credit data, if these are really correct: Once a year you can apply for a “data overview according to § 34 BDSG” online without any consequences.
- Specify second borrower
As a career starter, it pays off to include your partner or spouse as the second borrower. To improve your creditworthiness, increase the likelihood of lending and cheaper credit terms. This person must live in the same household as you – this should also be stated in the loan application.
Is a installment loan with a purpose limitation cheaper?
The normal installment loan works without earmarking, you as a borrower can use the money at will. However, in certain cases it is worth comparing earmarked loans, especially when buying a car and repairing and refurbishing real estate. In some cases, you can benefit from a lower borrowing rate. This has a positive effect on the total amount of the loan.
When car loan is the vehicle (used or new) automatically collateral, whether vehicle financing or used car financing. You must submit the Part II registration certificate to the bank. The bank rewards the lower default risk with interest rates that are significantly lower. Conversely, you can act as a cash payer at the car dealer and negotiate discounts.
Property owners can alternatively take advantage of a modernization loan. With a land register excerpt or tax declarations you prove your property and receive preferential conditions in the mantle of a classic installment loan. The earmarking, ie “modernization of the property”, you have already fulfilled with the proof of ownership. In fact, you can use the money as you like.
In addition, if you work or are a civil servant in the public service, a low-interest civil service loan is also an option. Due to the high income security of borrowers, they can receive relatively high loan amounts and agree on long terms. Interest rebates of up to 50 percent are possible. This particular type of loan is not just for installment loans, but also for a number of other earmarked financing.
Step by step to the installment loan
The application for a installment loan runs quickly and easily via the comparison portal of Financedel:
- Define loan amount, term and purpose
In the first step, you determine the loan amount and the term for the installment loan. In parallel, you choose the purpose. So you automatically benefit from a comprehensive comparison, for example, when installment loans with purpose are possible. The individual loan offers will now be listed in chronological order, with information on the monthly rate and the possible interest rates.
- Create a household bill
Based on your daily income and expenses, you now create a household bill, such as our household calculator.
- compare offers
Now take the household bill to hand. How much credit, so what monthly rate over what maturity can I afford for a installment loan? To do this, you can adjust the loan amount and the runtime with a mouse click at the top. Make sure that the monthly installments do not exceed the available budget, which you have determined in the budget.
- Make loan request for installment loan
Once you have decided on the loan offer, you will need to provide personal details and employment details in the loan request. One condition is that the borrower is employed outside the probationary period and indefinitely. Alternatively, the term may not be longer than the fixed term. In the next step, you also have to repeat part of the budget, and the bank also sets lump sums per person in the household.
- Accept written offer, perform Postident
After submitting the loan application, the written offer of the bank follows, here you must still legitimize yourself by means of Postident in the local branch of Deutsche Post. If all requested proofs and receipts have been submitted with the signed loan application, a Private credit inquiry will be made.
- Payment of the loan
The payment will be made within a few working days to the specified bank account. Your installment loan is now available.
Loan application without impact on Private credit score
The pure comparison and the loan application are only connected with a neutral “request credit terms” at the Private credit. This does not affect your Private credit scores. Only after you have received a loan offer and make use of it, the “request credit” is made at the Private credit.
questions and answers
How does an installment loan differ from a car loan?
Both loans are basically structured according to the same pattern. Regular, monthly installments will gradually pay off the loan. At the same time, the rate contains the proportionate interest, its share decreases as the repayment proceeds. However, the installment loan is without purpose, you can use it freely. In the contract, a wage or salary assignment is agreed by default, often the only credit security. When car loan, however, the financed vehicle is taken as collateral. For this you have to submit the registration certificate Part II, often already enough the copy. As a result, the interest rate is correspondingly lower.
What can I use the installment loan for?
The classic installment loan is freely available, it is not subject to any special purpose. Whether you use the money for debt restructuring, new purchases or repairs is up to you. In certain cases, for modernization of the property or a car purchase, there are earmarked installment loans: They offer significant interest advantages over comparable installment loans.
How do I calculate the cost of a installment loan?
The amount of the installment loan costs is determined by the “effective annual interest rate”, which includes the nominal interest rate plus any ancillary costs. So, if you want to compare loans with the same loan amount and maturity, you must always use the effective interest rate. Additional costs arise, for example, from the conclusion of a residual debt insurance or the pledging of life insurance policies. The first variant rarely makes sense, as it is relatively expensive and does not provide comprehensive protection against illness, unemployment, etc. Alternatives would be surety bonds or additional collateral. If these or your claims are assigned to the bank, colloquially “pledged”, low processing fees may arise.
When does a residual debt insurance make sense?
First, the premiums (= costs) for residual debt insurance (RSV) differ from provider to provider. As a first step, you have to check which RSV your bank accepts. Under certain conditions, it will provide you with long-term illness, occupational disability or death. It thus takes over repayment and interest payment up to the agreed maximum sum. Some banks require the conclusion of this RSV in order to provide a loan. In that case, the bank must include the costs in its “effective annual interest rate”. If you have endowment insurance or have taken out occupational disability insurance, you can transfer it instead of RSV. If you do not have this collateral and the bank has to finalize it, there is hardly a way around it.
How and when can the installment loan be terminated?
You as a borrower can terminate the installment loan at any time subject to a three-month notice period, provided that the installment loan runs for at least six months. In order to avoid a prepayment penalty for old credit agreements, you must write off the processing fee. The new regulation states that you can withdraw from the loan agreement at any time. A prepayment penalty is then limited to 1.0 percent of the balance, provided that the remaining term is 12 months or less. For shorter terms, a maximum of 0.5 percent may be charged as prepayment penalty. On the other hand, the Bank may terminate the loan as soon as you have fallen behind in full or in part with at least two consecutive installments. In addition, installment arrears must be at least ten percent (duration less than 36 months) or five percent (maturity over 36 months) of the original loan amount (principal amount). Furthermore, it must threaten the loan termination in writing to you, it must comply with a two-week period and point out the consequences of the termination.
Is the credit line no more useful for short-term financing?
No, even if it can be applied for and granted comparatively simply. The interest rates on the utilization of the credit line are in part at two or three times comparable interest rates for conventional installment loans. Only if, in fact, for a few weeks has to be “financed”, can the credit line represent the alternative. Also note that the bank may revoke this line of credit at any time without notice. By contrast, installment loans are subject to clear rules and deadlines for both banks and borrowers alike.
What collateral does the bank accept with the installment loan?
The basic requirement is a minimum net income, which varies from bank to bank. In addition, it may be necessary for you to raise collateral. The bank accepts all “customary collateral”. These include capital-forming life insurance policies, such as pension or occupational disability insurance. Time deposits can also be pledged. However, you should consult with your bank at an early stage as to whether these investments can ever be pledged as collateral. Because the bank has the last word here, the assignment is always subject to the approval of the bank.
Why can installment loans be rejected?
The most common reasons for a credit rejection include low net income and negative Private credit entries – or simply incomplete documentation. Even with fixed-term employment contracts, during the probationary period or in business start-ups (self-employment under three years), the thumb is pointing downwards. In some cases, non-balanced overdrafts (overdrafts) and frequent return debits lead to rejection.
What is the net loan amount?
The net loan amount states how much money is being made available to you by the bank in Euro. The total amount of the loan includes all costs incurred by taking up the installment loan. These
What are the monthly installments for a installment loan?
The amount of monthly installments can be found in the repayment schedule. The lender will give you this together with the loan agreement. The agreed rates for the loan will then be collected monthly from your checking account.