Month: October 2019

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.

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.

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.

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”

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.

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.…