Important to the loan
- Lower overall costs due to shorter term
Choose a shorter term, this lowers the total cost. But keep in mind that at the same time monthly rates are rising – these should not exceed your monthly budget.
- To arrange special repayments
Should you ever have more money, you can reduce the credit burden with a special repayment. Therefore, make sure that your loan provides for such special repayments and that you are spared any prepayment penalty.
- Variety of different loan types
From call loans to forward loans and full loan loans: There are many different types. Choose the right one for you and look for special offers.
A new car, a house – such projects cost a lot of money – money that most people can not afford in one fell swoop. One way of financing offers a loan. This is a contract of law by which the borrower temporarily lends or lends money to the borrower.
When the loan is due, the borrower is required to repay the loan granted. The loan usually consists of a repayment and an interest component, which are weighted differently depending on the loan type. As a rule, the loan incurs interest which, unless otherwise agreed, is payable at the end of each year.
But there are also so-called interest-free loans, such as the Federal financial aid loan, for which the borrower does not have to pay interest. In addition to the interest rate, the loan agreement may include a loan fee, the amount of which depends on the loan amount and may vary from bank to bank.
Loan and credit
The term credit is the generic term for the loan. The loan is thus a sub-form of the loan. A loan refers to the current account overdraft mostly on high sums of money with a long term.
In fact, both are about raising debt. Loans are usually called longer term bonds with a larger amount. On the other hand, loans often have a shorter term and include lower credit sums. The legal framework for the loan is § 488 in the Civil Code (BGB). The exact wording can be found below in the text.
From a legal point of view, until the so-called reform of the law of obligations on January 1, 2002, there was another difference: in contrast to the loan, the loan was set as a so-called real contract. That is, the loan agreement was valid only when the agreed loan amount was received in the account of the borrower.
On the other hand, a credit agreement is considered to be concluded as soon as it is signed by both parties. Today the so-called consensus theory is pursued in Germany. After that the contract comes about already by the agreement of the contracting parties.
Contractual obligations b. Loan agreement (§ 488 BGB)
(1) The loan agreement obliges the lender to make available to the borrower a sum of money of the agreed amount. The Borrower is obliged to pay an interest due and to repay the loan provided when due.
(2) Unless otherwise specified, the agreed interest shall be payable after the expiry of each year and, if the loan is to be repaid before the expiry of one year, upon repayment.
(3) If a period of time for the repayment of the loan is not determined, the due date depends on the lender or the borrower terminating the loan. The notice period is three months. If interest is not owed, the borrower is entitled to repayment without notice.
Each loan must be repaid after a specified period. So you can pay the amount of money including interest, for example, in one piece or in installments, such as a bank loan. In order to best adjust the repayment to the claims of the borrower, he has the option to choose between different loan types. Bank loans differ in particular with regard to the repayment agreements.
Below is an overview of the different loan types. It’s best to check with the bank in advance to get the exact conditions. In addition, it is advisable to compare the loans of different providers to find the best possible offer. In this case, the Financedel credit comparison can be a valuable help.
|call loan||In the case of a release loan, an agreed loan amount is made available in the form of a credit account which the borrower can access at any time. In contrast to the discretionary credit, the repayment is made at an agreed fixed rate. If only a partial amount of the loan is debited, then only interest accrues.|
|annuity||In contrast to the term loan, repayment of the annuity loan takes place at a constant monthly rate. The installment consists of an interest and an amortization section. The advantage: As the loan amount repaid increases, the interest rate decreases continuously. At the same time, the repayment share increases, so that the monthly rate remains the same overall. Due to the unchanged installment payment, this type of loan is easy to plan.|
|Building loans||A special type of loan is the building society loan. This is taken out at the end of the term of a home savings contract and extends the already saved capital by a loan amount. The advantage: savers can often benefit from particularly favorable lending rates, which are already specified in the savings contract.|
|officials loans||The Civil Service loan is for civil servants, academics, pensioners, civil servants and teachers who need capital. The official loan is a so-called bullet-end financing that borrowers in combination with life, annuity or capital insurance. In contrast to the civil service loan, the installments are not paid directly to the bank but to the endowment life insurance. With this, the debt is repaid at maturity.|
|Final loan||With this loan type, the entire loan amount is repaid at the end of the repayment term. Only the interest rates which remain the same over the entire term due to the one-time payment of the loan amount are transferred to the bank in monthly or annual installments.|
|Forward loans||The forward loan is a loan for the future. The advantage: The interest rate that was agreed at the conclusion of the contract, even if the loan is actually paid. The forward loan is used primarily for real estate financing. This type of loan is favored by real estate buyers, who expect interest rates to increase significantly in the future.|
|Real estate loans||A real estate loan is earmarked for the purchase, construction or renovation of a property. Due to the security provided by the property, the terms are often cheaper than traditional loans. Partly, extensive documents such as building plans or floor plans must be submitted for application.|
|Patriarchal loan||The patriarchal loan is a long-term loan to a company in which the lender is compensated by a profit or revenue share of the company. In addition, an additional interest may be agreed.|
|redeemable loan||The equivalent of the annuity loan is the repayment loan. With this type of loan, the repayment portion remains unchanged throughout the repayment term. On the other hand, the interest costs decrease in the course of the repayment, whereby the installment amount steadily decreases.|
|Volltilgerdarlehen||The Volltilger loan is an annuity loan. That is, the borrower pays a monthly fixed rate consisting of an interest and an amortization section. At the end of the term, the loan is fully repaid. This type of loan is suitable for homebuyers who want to avoid several financing rounds in mortgage lending.
Basically, the shorter the term, the higher the repayment share and the faster the loan is completely repaid.
Payout on the loan account
Since loans are not paid out in cash, but are usually issued by banks, an account for the loan amount is also required. The borrower, the customer of the bank, must set up his own loan account. This usually has to be opened even if a checking account already exists at the bank. The banks regulate normal accounts and the money transactions taking place there separately from loans and loans, therefore they also demand the establishment of a loan account.
Fees for the management of this loan account are no longer allowed, but before 2011, these were still charged. A ruling dated 07.06.2011 (reference XI ZR 388/10) stipulated that the clause on a monthly fee for keeping the loan account in the general terms and conditions of the banks is ineffective.
The loan account is opened prior to the transfer of the loan amount and can be used for all payments related to the loan itself and the issuing of the money. As a rule, banks do not accept any other payments that are made through this account. The account should only be used for the loan amount.
The loan account must be opened at the bank which also grants the loan. An account with another bank can not be used for this.
Private loan: advantages and disadvantages
You can get a loan not only from a bank, but also from individuals – such as a good friend or relative. Some companies provide loans from individuals who want to generate returns on their surplus capital to private borrowers online. This loan type is also called a private loan.
The advantages of a private-to-private loan are obvious: There are no stringent criteria catalogs for lending, as is the case with a bank loan. Private persons also determine the terms of the contract itself. Furthermore, the credit check by a credit agency such as Private credit is no longer required. In terms of collateral, too, private loans are usually very informal.
As simple as private lending appears, it still has its pitfalls. For example, if there are disputes between you and the lender, you can not contact a consumer protection organization.
In addition, it is important to record specific items such as the duration of the loan in the contract. If this is missing, your lender can terminate the loan at any time with a notice period of three months. In this case, you would have to repay the entire loan amount in one piece. Also, personal relationships can be jeopardized because of problems with the loan agreement. Private lending should therefore be thoroughly considered.
Setting up the private loan agreement
Anyone wishing to take out a private loan should in any case set up a written contract in order to clarify the terms of the contract and, in the event of a dispute, refer to the contract. The exact design of the contract is freely agreed, but certain points should not be missing. These include, for example, holding the exact loan amount and the term of the loan. In addition, the exact dates of the contracting parties, the payment date and the start of the repayment date should be determined in the contract. Should the lender give up interest, this point also belongs in the document. A signature of both parties seals the agreement.
Collateral for the loan
Especially with higher loan amounts, individuals should insist on collateral in case the loan is not repaid. The most common form of security – both for private individuals and for banks – is the so-called security transfer: According to § 929 sentence 1 and § 930 BGB thereby the lender of the borrower a valuable object is assigned as for example a car. The borrower can still use the vehicle, but must hand it over to the lender if he does not repay the secured loan.
Another common form of collateral security for a personal loan or an installment loan is the so-called security assignment. This is regulated by § 398 BGB. The rule states that if the loan is not repaid, the lender can assert claims assigned to third parties for collateral. For example, these claims may be the salary of the borrower, provided that he is an employee.
With the assignment of security, the lender has the right to approach the employer of the debtor and to claim the salary.
Interest at a low level
The interest on a loan is basically nothing but compensation for the borrowed money. The lender – be it the bank or a private person – makes so by the interest rate a profit.
The interest rates on a loan depend on various factors. These include, but are not limited to, the term of the loan and the loan amount, but also the borrower’s creditworthiness and the type of loan. The borrower is, of course, interested in keeping the interest rate as low as possible in order to reduce his overall loan costs.
In recent months, interest rates have fallen steadily. This should encourage people to borrow more money, which then flows into the economy, instead of investing money. The benchmark rate set by the European Central Bank (ECB) is a guide for banks to set their interest rates.
Currently, the key interest rate in the eurozone is at a historically low level of 0.0 percent (as of May 2017). The majority of the experts assume that the interest rates remain in the cellar for quite a while. With the low level of interest rates, the ECB wants to boost the economy, especially in the weaker economies of the EU.
Loan calculator and mortgage calculator: Aid in search of favorable interest rates
The market offers a variety of bank loans. It is difficult for the credit layman to gain an overview of the wealth of offers. For this reason, there are loan or mortgage lending calculator. The Financedel loan calculator will help you compare rates from different providers and so to find the best deal on a loan. In order to determine the ideal conditions, you must provide some information.
For example, the purpose of calculating the ideal loan is its purpose. Depending on the type of use, different loan types are suitable, as explained in the section “Loan types”. Thus, a car loan or a caravan financing can be cheaper because the vehicle can serve as security. Other parameters that play a role in finding the cheapest loan are the term and the loan amount.
After entering the necessary parameters, the credit rake calculates appropriate offers from various banks for you. Compare these together to find the best possible offer for you. In addition to the indication of the APR and the monthly installment, the Financedel loan calculator gives you an insight into the acceptance rate of the respective provider and also shows customer recommendations.
First calculate the need for money
First, calculate how much money you want to borrow before you arbitrarily enter numbers into the loan calculator. Make a list of all the costs that come with you – including utilities and taxes. The summed up costs result in the desired credit volume, also called the net loan amount. The next step is to calculate what monthly installments you can afford by setting up a household bill. With the household calculator, this is very easy to do.
Effective annual interest rate crucial
When choosing a loan, always use the APR and not the debit interest. The latter only indicates how high the interest rate is on a loan, whereas the annual percentage rate includes debit interest and other costs such as processing fees. So it represents the total cost of the loan.
Favorably influence loan conditions: You must pay attention to this
You can favorably influence the loan terms if you choose a shorter term. If the term is long, interest will be payable for a longer period, increasing the overall cost of the loan. Beware, however, of short maturities: you pay less interest overall, but the monthly installments are higher. Therefore, based on your budget, consider which monthly rate is convenient for you.
In general, the lower the interest rate level, the less the longer the maturity. But when interest rates are high, keep the maturity as short as possible.
Another aspect that can positively affect the return on a loan is a second borrower. If this is included in the contract and he has a regular income, the credit default risk for the bank decreases. Due to the greater security you are often granted more favorable terms.
In addition, you can save money by not having to take on a residual debt insurance. The insurance serves as collateral, should the borrower die, become unemployed or sick. In most cases, it is only worthwhile with a high volume of credit. Check the above points before concluding a loan to determine the most favorable terms.
During the repayment period, special repayments allow you to reduce the total cost of a loan. If you have a little money left over that you do not currently need, you can make a special payment. By repaying your loan faster, there is less interest cost.
Pay special reimbursement fees
Some providers charge special repayment fees. Check in advance whether your bank charges these fees and, if necessary, calculate whether the interest savings due to the special repayment is higher than the applicable fee.
Interest calculation for a loan: example formula
The interest calculation of a loan is based on different formulas. Depending on the intervals in which you pay the interest, the formulas differ. The annual interest formula, for example, indicates which interest accrues for exactly one year according to the nominal annual interest rate. The annual interest formula is:
Z 1 = K 0 × p ÷ 100
Z 1 is the interest income to be determined, which results from the capital K 0 multiplied by the interest factor (p). The percentage interest factor is divided by 100. The interest income thus indicates the amount at which the initial capital will bear interest for a period of one year at a specific interest rate.