Credit bases Interest Rates
April 6, 2019
You can not always afford what you would like to have right away – car, vacation, the new smartphone or anything else – with your own financial resources. However, precisely for such a situation, there is financial support in the form of a loan, which usually comes from the own house bank. However, where one used to rely on the advice of the very same bank, it is now common practice to obtain information about applying for a loan on the credit terms on the Internet and to make a corresponding loan comparison. But as easy as it sounds, a comparison is not – despite the often very extensive information available. After all, every year a high percentage of loans are completed at too high a cost. But why is that? What is important in a credit comparison, we want to briefly show here. an elucidation on paroiciel.org
The annual percentage rate of credit
The annual percentage rate – the supposedly most important criterion in the valuation of a loan in the form of a credit comparison. So far, so true – but only if the different credit options available for selection are identical in other respects and therefore comparable. These include fixed interest rates, collateral and special repayments. For example, if a bank requires a large number of collateral, it should then also be included in the annual percentage rate of charge. The same is true for granted special repayments, because to one it makes a loan flexible and ultimately ensures better credit conditions (lower term = less interest burden!).
Disagio on the loan? What does that mean?
The so-called discount is often a point that is often neglected in a credit comparison, but this is a serious mistake. The discount is an interest deduction, which is deducted to the borrower when the loan is disbursed. So often the loan amount is increased by just this interest rebate, which in turn leads to a higher residual debt. The higher the discount, the more disadvantageous for the borrower!
The same applies to the unconditional consideration of any processing or agency fees. The higher these fees, the more expensive the credit in the end!
Credit-based interest on credit? Attention!
Please also note the credit offers on the reference to so-called “credit-based interest rates”. This form of interest is often based on the best possible credit rating of a credit customer, seems at first glance as a TOP offer and thus particularly favorable. The reality, however, is that these credit rating criteria for obtaining such low interest rates are met by hardly any consumer. So the result is often that you lock the loan at a much less favorable interest rate.
TIP: Since the summer of 2010, banks are required by law to showcase not only the – often very attractive – interest rate from advertising, but also a representative credit example. It is important to look at these examples of credit very closely, as you come closest to reality.
However, if you only want a short-term loan, then the loan calculator for comparison on our website is quite sufficient. We at Edmond Dantès have only an APR, a fixed term of 15 days or 30 days, no processing fees and no discount! Because we are Edmond Dantès – the friendly, transparent financier!