Everybody who needs a loan wants a loan with low interest rates – and the offers of the banks often sound promising. But often it turns out after applying for a loan that the interest rate is much higher than expected.
This does not mean that you have to punish the offers of the banks: For often even the small word “down” before the example described interest rate indicates that not only this is relevant, but the terms are variable. An “asterisk” behind the example interest rate points to further explanations: Often the specified interest rate is the lowest possible – and this is usually granted only if the bank’s audit does not give rise to the slightest objection. And the term is as short as possible – because longer maturities increase the Bank’s risk that the financial situation of the debtor deteriorates and he is insolvent in the worst case.
What increases the chance of getting a loan with low interest rates?
Indispensable: A realistic assessment of one’s own economic situation
If you want to conclude a loan with low interest rates, you should inform yourself in advance about what is important to the bank: First, the loan amount should be in a realistic relationship to their own economic performance. To ensure this, it is advisable to take off the pink glasses and get an overview of the running costs – and rather generous, because often come unexpected load: Whether repair of the washing machine, or the car – or a school trip for the Child, the possible loan installment must always be payable. Maintenance obligations and other pre-existing loan commitments are also part of the expenditure and must be provided and demonstrated to the bank.
Child support or child support is not an income that is taken into account when applying for the loan: alimony is payable exclusively to the child (and can not be attached). The child benefit is still due to the parent to whom the child has his / her regular residence / residence; but since it is not certain that the child will always stay there, this amount is usually not taken into account.
Important: a permanent work relationship
As far as employment is concerned, it is generally required that the prospective borrower is employed by one and the same employer for at least six months: longer periods of employment and, above all, permanent employment are given a more positive rating Borrower becomes unemployed and thus insolvent – a risk that can be significantly reduced if a residual debt insurance is taken out, which occurs in the event of unemployment, death and possibly even illness. It is also beneficial if two people apply for the loan together, or a second person takes over a guarantee for the loan – so the bank has not just one debtor, but two.
Often the “tip on the scales”: The credit bureau information
If the prerequisites described above are met, the bank will continue to evaluate the credit bureau information: this allows an assessment of the past behavior in payment transactions – and provides a forecast of the expected payment behavior. In order to avoid any nasty surprise, it is advisable to request a credit bureau self-assessment and check it – this is available free of charge once a year – and under certain conditions, the deletion of entries can also be requested.
All in all, credit bureau’s statements can “tip the scales”, which, if rated unfavorably, increase the lending rate, or give the bank the feeling that the concrete, potential borrower is a particularly reliable and conscientious contractual partner who fulfills his obligations always and regularly. Then nothing stands in the way of a loan with little interest.
Helpful: Additional collateral
It can also be helpful to provide the bank with additional security in order to increase the chance of obtaining a loan with low interest rates: the registration of a mortgage on a real estate without encumbrance, the transfer of the vehicle as collateral (then the bank receives the motor vehicle letter) or the pledging of valuable assets can help the bank – rightly – assess their risk and offer a lower interest rate.