There are many reasons why a loan is needed. For example, it can help finance a high-quality product (car, flat-screen TV) that cannot be bought in cash.
This means that these goods can be paid off in small monthly installments that also fit into the budget. Long phases of savings are no longer necessary, so loans provide financial flexibility. At house or apartment purchase can also be financed by credit. The financing of consumer goods is a trend that continues to advance. Many dealers now offer financing through partner banks. These partner banks are mostly credit banks that specialize in the granting of consumer loans.
This specialization gives the customer a cheap loan, and processing is quick and uncomplicated. There are numerous providers of loans. You can find them at branch banks on site, but also on the Internet and, as described above, at the retailer. Before concluding the contract, however, it makes sense to compare the offers. So you can find loans with a term of 12 months for both less than 4% pa and for 10% pa The decisive factor for the interest rates are both the loan amount and the term. Customers should not only compare the nominal interest rate of a loan, but also use the effective annual interest rate. In addition to the nominal interest rate, the annual percentage rate also includes processing fees, account management costs and credit insurance costs. The processing fees for a loan are between 0.5% and 3% of the loan amount.
For installment loans, the banks also offer credit insurance that covers both the risk of death and unemployment and disability. The cost of this insurance must also be included in the APR. But be careful: not all banks include the insurance because the conclusion is voluntary. Here the costs should then be compared separately. There may be additional costs for a loan.
For example for the provision of collateral. In the case of construction loans, for example, borrowers have to enter a mortgage on their own home. The land registration contract must be signed with a notary who incurs costs. Registration in the land register at the land registry office also incurs costs. Anyone looking for a loan should compare the offers of the various providers on the Internet. Here are some pages where loan comparisons are possible. The use of these pages is usually free of charge, it is financed by advertising. There is also the option on these pages to go directly to the bank.
For the comparison you only have to enter the loan amount, the desired term and the type of financing (installment loan or mortgage). The program then shows the cheapest offer. Of course you can also obtain and compare the offers yourself, the preparation of offers is free of charge at reputable banks.