Loans bad credit: lenders offer credit-related interest

As in any other industry, the credit market is subject to continuous development and corresponding Trends. However, this does not only mean the development of interest rates as such, but also the way banks calculate interest rates. This refers first and foremost to the interest rates that customers have to pay for a loan. While some years ago it was still common to offer a fixed uniform interest rate for a loan with no credit check or bad credit, it looks different nowadays. Anyone who observes the credit market attentively notes that more and more credit offers with a credit-related interest rate are offered. A development which should be considered with concern. Not every Trend develops to the benefit of a consumer.
calculator of bad credit
Two interest rate models to determine the market for loans

In particular, banks use two common interest rate models for the two most common loan offers – the installment loan and the car loan. On the one hand, there is the group of credit institutions, which estimates so-called non-credit interest rates. In this case, the same interest rate applies either to each customer or the amount of the loan interest is made dependent on the duration and amount of the loan the customer chooses. On the other hand, there is an ever-growing group of banks that opt for a credit-related interest rate on their credit offering. Here, it is essentially the creditworthiness of the customer, which is significantly involved in which credit interest is ultimately to be paid. Depending on the type of loan, if one looks at Credit-related and non-credit-related interest in the total, then there are three to four influencing factors that affect the amount of interest to be paid.

This includes:
1 Amount of the loan
2 Runtime
3 The credit rating of the customer
4 Any collateral

Credit-related interest rate: benefits for the credit customer? No one!

Does the question arise, whether this Trend at the lending banks can actually be derived any advantage for the customer? Here, a clear “no” can be answered. Because basically, it would be only credit seekers with a very good credit rating who benefit from this System. However, since there is hardly anyone in Germany who has a TOP credit rating according to the criteria of the credit rating agencies, the best interest rate offered by banks would hardly be achievable. As a result, the Bank calculates a significant interest surcharge for customers with a mediocre or inferior credit rating. Another disadvantage is definitely that offers that include a credit-related interest rate can be compared very badly with other credit offers. Because a credit calculator does not work reliably at this point, because it is precisely not to be estimated to what extent the creditworthiness of the customer actually affects the interest rate.
credit score usa
Conclusion: the lending Bank benefits primarily from the credit-related interest, because this allows it to set a specific interest rate for each customer individually, without having to justify itself in Detail.…

Study confirms: Online payday loans are cheaper than in-store loans

A study by the USA Institute for service quality – in short: DISQ – confirms what has been regarded as a subjective finding among potential borrowers: online loans are often cheaper than loans concluded in the branch. This, in the context of the study, the knowledge and insight gained applies not only to installment loans from direct banks, but also credit the so-called branch banks. This was the result of the USA Institute for Service quality (DISQ). On behalf of n-tv, this company has tested the terms and consulting services for installment loans from 25 usa branch banks. This shows that, particularly with regard to the effective annual interest rates for a loan, substantial interest margins are possible. For a loan of 5,000 dollars, the banks surveyed by DISQ demanded annual effective interest rates of between 4,12 and 8,99 percent per year.
online payday loans are cheaper
Credit on the Internet usually significantly cheaper

Especially at one point surprised the result of the DISQ study. The branch banks surveyed offered significantly lower interest rates in their website for the same loan than in the bank’s branch. According to the market research institute, customers of the tested Money Houses receive an online loan on average with an annual percentage rate of around 5.36 percent. The same credit is completed by the loan prospective customers in the local branch, the average interest rate for store credit then with 6.67 percent per year to a quarter of higher – mind you: in the same conditions! It is therefore close to the conclusion that as a credit customer for a branch Credit One has to pay a possible personal consultation by an employee in the bank branch with a correspondingly higher interest rate. What is basically acceptable and many credit customers would be willing to accept financially even without corresponding opposition. Provided that so then, in accordance with a quality credit counseling at an in-store credit is guaranteed by eìnen employees. For personal advice, borrowers therefore have to pay more. For many, this is fine − as long as the quality is right. However, even on this point, the testers of the DISQ have found considerable deficits in the financial institutions tested.

Quality of advice on loans is only “satisfactory”
business loans
Overall, the assessment of the banks quality of advice on loans is relatively modest. Overall, this means that from the perspective of the DISQ, this quality of advice of financial institutions can only be assessed as “satisfactory”. One of the shortcomings identified in personal advice is that the customer’s individual needs were often only superficially identified by the bank advisers. Another point of criticism is the mediation of the so-called residual debt insurance, because in almost one in ten consulting customers felt compelled to conclude such a contract. Consumers have been recommending for years to take out a residual liability insurance directly with the Bank, as these are often too expensive and are not always customer-friendly in terms of terms. On the other hand, as a positive factor in the local advisory services, DISQ found that no Bank made a credit request, but merely made a neutral condition request to credit score. It does not negatively affect the customer’s Score. The complete DISQ study is available here.…

This way you can get your compensation back

If the so-called withdrawal Joker is mentioned, then it is usually meant, that borrowers from a running expensive credit in a much cheaper loan debt and thus save a few hundred euros per month.
compensation back
But there is another, equally interesting aspect: If you dropped out in the past few years, in advance of a credit agreement and a prepayment penalty paid, then you can get the money back from your Bank.

And this is how it goes: suppose you completed a financing for the purchase of your own apartment in 2015. Then they probably agreed on a five percent interest rate for a ten – year fixed interest rate – split over their thumb. In 2018, they made a surprising Inheritance and came to the conclusion that it is Best to use the money for the early repayment of the credit rather than zero interest rates, somewhere in a savings book. So far quite clever thought. However, she probably only let her Bank go after they put a proper portion of her inheritance in the prepayment compensation-never again.

But it is precisely this money that you can get back now if the credit agreement has a wrong withdrawal clause. This is not so rare, because more than two-thirds of all contracts from this period are flawed. Let this simply be revoked for free and without obligation on the IG Website check.

You have a particularly good Chance when the loan was concluded between November 2012 and mid-2018 and the payment of the advance payment is no longer than three years ago. If this is not the case, an examination can nevertheless be promising, even if the chances are then reduced.

But now there are also conflict-shy fellow human beings who shy away from costs and legal dispute, even if they had good chances of a proper repayment by the Bank. But they can also be helped. Because there are specialized providers who buy the right to the repayment of a prepayment compensation. This means for you: no cost, No risk – you get back only a portion of the money paid. Here, too, we provide contact with the respective providers at IG revoking.

Which option is more favourable for you, you should decide on the basis of your personal risk profile. What is clear is that doing nothing is the worst Alternative.…

How to halve the cost of your mortgage

For real estate owners who have financed the purchase of an apartment or a house over the past five to ten years, there is currently a unique opportunity. You sit in the credit contracts with interest rates of four to five percent, while currently between two and 2.5 per cent for ten-year-old construction loans are paid – that’s a difference of several hundred euros per month.

However, in many cases, it is now possible to withdraw from these expensive contracts. Because the banks often have sloppy and made mistakes, which allow the customer an immediate exit from the expensive loans.
In concrete terms, this concerns the revocation instructions, which are part of a credit agreement and are normally intended to enable the clients to withdraw from the contract within 14 days. As a result of some legislative changes, banks are in many cases different from the model texts, especially between 2012 and 2019, when formulating these revocation clauses – a mistake that now avenges.

Because these changes often made the clauses unclear and therefore unusable. For example, many texts do not clearly show when the 14-day withdrawal period begins. Numerous courts, including the Federal Court of Justice, have ruled that in such cases the withdrawal period has not started to run at all – with the consequence that customers can still withdraw today and thus withdraw from their expensive financing with immediate effect.

These are not individual cases. Consumer headquarters estimates that around 80 per cent of all building financing completed between November 2002 and June 2010 are affected. So the chances of getting out of expensive real estate financing and taking advantage of the currently low interest rates are not bad.

I got out of such an expensive contract myself. This has brought me to an idea: with the IG revocation, I create a community of interests that conveys your requests to specialised lawyers. The offer looks like :

– Within a few days you will receive a free initial assessment of whether your credit agreement contains an incorrect withdrawal clause.

– A similar check costs 70 Euro at the Consumer Centre Hamburg and currently has waiting times of several months.

Please note that only credit agreements that you have entered into as a private person (no traders, developers, etc) during the period from November 2012 to June 2019 are eligible. Use the opportunity to upload your credit agreement to the “free review” section of this Website. Or Fax the contract and if you Fax the contract, it is very important to remember, a cover sheet with your contact details incl. E-Mail as we will reply by e-mail after the examination.

Of course, we treat your data confidentially and not passed on to third parties.

If the first examination is positive, then you should definitely mandate a specialized lawyer. Although you can try it on your own. However, my experience shows that the banks are unlikely to react if they are only addressed by the customer in a friendly manner to the potential shortcomings in the credit agreements. The Michael Hugley also writes about this: probably your Bank will not let you just go. You must then turn on a lawyer.

If the examination of your contract is positive, in some cases there is even the possibility that a legal protection insurance bears the costs-even if you have not yet completed a policy .…

Tips to avoid over-Indebtedness

As is currently apparent from the over-indebtedness Report 2014 of the Institute for financial services, despite a good overall economic situation in USA, the number of households considered “over-indebted” increases. In 2018, around 3.36 million households were considered to be over-indebted. Compared to the previous year, this means an increase of around 60,000 households! The average debt burden per household in 2018 was around $ 54,500 – a once again significant increase compared to the previous year at around $ 53,000. In particular, the average age of debtors now drops to 40.2 years. Here, the number of young people in debt is likely to have a significant influence, because in this target group the level of debt has risen most significantly.

Having debt does not mean being over-indebted
However, one thing should be clear on the issue of over-indebtedness, because not every debt is necessarily over-indebted. It is true that debts are to be understood as purely payment obligations first. Over-indebtedness is only referred to when one’s own financial resources are no longer sufficient to meet the financial claims from loans, etc. In this case, banks also speak of a so-called default of repayment in the case of loans.

How is it to over-Indebtedness?

But what are the reasons for an overindebtedness? The iff also referred to this issue in its study. The most frequently identified reasons for overindebtedness are:

• Unemployment

• Income poverty

• failed self-employment

• Divorce /Separation

No question that the above reasons have to be regarded as hardly foreseeable, let alone avoidable. There are, however, over-indebtedness reasons, which are considered avoidable, if you adhere to a few simple rules. According to the study, more than a sixth of consumers are considered to be responsible for their own over-indebtedness!
Tips to avoid over-indebtedness
Indebtedness money
With a few simple tips and a changed behavior pattern, however, the risk of over-indebtedness can be significantly minimized:

1.) by keeping a budget book, it is essential to keep track of the monthly costs, because only those who look at their finances can assess what they can afford and what they cannot afford. In addition, it can be ensured that, for example, no excessive repayment rates are agreed upon when a installment loan is taken up.

2.) Create a household invoice, in which you test all costs such as telephone, Internet, electricity or Gas. If there are too expensive old contracts, then it must be checked whether the same services are not also available at more favorable conditions.

3.) do not show uncontrolled consumption behaviour. In 8.6 per cent of all cases, over-indebtedness is due to such a confusing consumption behavior. Thus, in particular, it is not possible to be tempted to buy from the various financing offers in the trade.

4.) equally problematic: a permanent use of the overdraft facility. If the account is in a negative position for a long period of time, you should consider replacing the overdraft facility with a more favourable installment facility.

5.) before making use of a installment loan, one should look carefully at the terms of individual loan offers and make detailed comparisons accordingly.…

More consumption on credit, according to the study

The financial crisis and its negative impact on consumer behaviour seems to be largely over, at least with the German citizen, if one believes the current study of a large German Online Bank, in which 2000 German citizens from 14 years were questioned about their acquisition plans for the coming year. The study shows quite some interesting results.
more consumption on credit, according to the study
For example, 54 percent of German consumers are planning to buy more in the near future, of which one in two would be willing to make this purchase with the help of a loan. The life on Pump or the use of any kind of credit seems to have a high degree of acceptance among the German citizens to date, although the Trend in this context is rather negative compared to a similar study carried out in spring 2015. For example, fewer German citizens are planning to purchase more than in the spring and also have a slightly lower overall Budget available.
Significantly less savings available than reserves

It is unquestionable that consumer behaviour is often also a matter of money available and it is precisely here that German citizens like and fully aware of the personally given financial framework. After all, around 54 percent of the participants in the representative survey state that they would like to spend more money than the actual financial scope allows. However, it is not surprising that only 14 percent are able to make planned expenditure without financial restrictions.

To make things a little more tangible: around 25 percent of German citizens have less than 625 euros in reserves for unexpected spending available. In fact, every tenth has no savings, which he could fall back on in the event of an emergency. Another third of consumers, however, between 625 and 2,500 Euro in Reserve. Thus, the bridging of any financial bottlenecks can often not be bridged from own resources and thus in many cases forces a loan or loan.
Consumers are open to credit

Thus, if a financial emergency occurs, many consumers are obliged to borrow because of insufficient reserves or at least insufficient reserves in the Situation. However, those who accept now that this fact gives the Germans about a certain discomfort here, based on the results of the study, disabused. The willingness to finance a purchase at least partially using a installment loan is extremely high at 48 percent. This willingness is especially given by the 22-to 34-year-olds.…