What do I have to consider before I take out a loan? What information helps to choose the right financing and bank? Not every loan fits every life situation. You often tie yourself to a loan contract for years and pay the loan installments month after month. Regardless of whether for building finance, a car loan or an installment loan – comprehensive information is important for the right decision.
If you want to take out a loan, you should answer the following questions in advance:
- What additional amount can I raise per month?
- How flexible am I after completing the loan?
- How much does my income fluctuate?
- What major purchases am I planning in the future?
When the questions are answered, it is easier to make the right decision. For example, someone with a strongly fluctuating income should make sure that there are special repayment options or that the payment is made annually. If high additional loads restrict flexibility too much, it is often better to choose a long term.
How do I find out my monthly costs?
The interest does not say everything about the monthly charge! The debit interest rate, for example, describes the pure interest rate without additional costs such as the processing fee. The most important key figure is the annual percentage rate. This describes the interest charge including ancillary costs.
The second factor that affects monthly costs is the amount of the repayment. If you want to pay off a high loan within a short term, you have a high repayment rate and therefore high costs. The absolute interest charge is lower due to the short term. With mortgage lending in particular, you get a significantly lower interest rate for a short term. Overall, a short term is, therefore, cheaper, but reduces the flexibility to deal with changes in the wealth situation.
How do I optimize the cost of my loan?
The most important lever for low costs in financing is interest. The lower this is, the cheaper the loan. The interest depends on the term and the duration of the fixed interest period. The longer the interest rate is fixed, the more uncertainty for the bank and the higher the interest premium. A short fixed interest rate or a variable interest rate means low costs, but little planning security. You can optimize in both directions with the following strategies:
Take out loans with different terms and fixed interest rates
You can take out a loan with a short term or short rate fixation and a loan with a long rate fixation. In the mixed calculation you get a lower interest. At the same time, you have a high degree of planning security for the cross-country skier. With a building loan in particular, it is often possible to agree on higher special repayments, which can then be used for the long-distance runner as soon as the short runner has been paid off. If the bank does not allow flexibility in repayment, the disadvantage of this model is that you have to deal with a higher burden for a certain period of time.
Interest rate with a variable interest rate but a cap with rising interest rates
If you assume that interest rates will remain at a low level but do not want to limit the risk, you can use this credit strategy: you do not pay at the bank for the full rate fixation, but only for a maximum rate. This allows you to calculate your maximum credit risk, but benefit from lower interest rates or maybe even falling interest rates. Some banks even offer to use this model during the term of the loan. However, this means that you have to keep an eye on market events and indices such as the reference rate bank.
KSV-related problems with borrowing
If you have problems getting a loan because of a negative KSV entry, you can find out about conditions under Credit without KSV and find out what you should definitely consider when choosing a provider.