What constitutes cheap installment loans and how can they be found? A cheap loan should offer more than an attractive interest rate. Additional criteria should therefore be taken into account in the installment loan comparison. We clarify: When is a loan cheap? What clauses in the contract must borrowers pay attention to? And how can you reliably track down the best offers on the market?
Cheap installment loans: This is how they can be recognized
The effective interest rate on an installment loan is a “hard” and therefore particularly important feature in the loan comparison . If the interest rate of an offer is significantly higher than that of a competitor, this can hardly be offset by other criteria. A low interest rate compared to the market is therefore a necessary condition for a good offer. However, a good interest rate is not sufficient. Borrowers should therefore pay attention to other clauses when comparing different offers.
The conditions for special payments are an important aspect. According to the law, special payments are always possible – the mere possibility is therefore not an argument. Favorable installment loans enable free special payments: in these cases, the bank should refrain from any prepayment penalty.
This should apply to partial and full repayments. Free special payments are important because they make it easier to reschedule the loan at a later date. If interest rates drop in the meantime or your credit rating improves, a cheaper loan is available – this can be used immediately with free special payments.
Cheap installment loans offer more than a low interest rate
Inexpensive installment loans are convenient and can be obtained without major hurdles if the creditworthiness is sufficient. Pay attention to the details of the application. How do you have to prove your income? How long does it take to actually deposit? Do you have to go to the post office or can the entire application be run through on the screen?
Another important aspect concerns the acceptance criteria. A cheap loan is of little help if you don’t get it at all. Does the bank exclude self-employed people despite good numbers? Do employees with children or maintenance obligations have to prove an unusually high income? A supposedly cheap installment loan can become unattainable due to hard acceptance criteria or (through interest surcharges) an expensive loan.
The credit market is always on the move: conditions and providers are constantly changing. When making a comparison, it is therefore important to use up-to-date data and still include as many providers as possible. This is possible for. B. with the comparison calculator on Astro Finance. A tip: Do not exclude loans with a credit-related interest rate from the comparison, as these are often particularly cheap.
Why are cheap installment loans so popular?
Many direct and branch banks offer cheap installment loans, which should meet the consumer’s desire for uncomplicated financing. Such installment loans are often referred to as consumer loans and are part of the repayment loans. The consumer who applies for an installment loan receives a certain amount. He pays these back to the lender in fixed monthly installments. The interest rate is determined in the context of the loan agreement and remains the same on the account statement throughout the term of the loan.
The reason for the popularity of installment loans is the uncomplicated and flexible conclusion. A loan comparison is quick and easy, especially with installment loan calculators. Such an installment loan calculator compares the loan offers of various banks in relation to the criteria specified by the consumer. The loan term and the desired loan amount play a major role here. Installment loan calculators determine possible installment loans based on these criteria.
A cheap installment loan is characterized by low monthly installments and a low effective interest rate. This interest rate represents one of the hurdles of the installment loan comparison. Often, banks do not state the effective interest rate, but rather the nominal interest rate. This is a disadvantage for the consumer in that the nominal interest rate does not yet take into account all additional costs of the loan contract.
Advantages of the installment loan
Cheap installment loans offer the consumer various advantages. Borrowers benefit from a high level of planning and calculation security due to the fixed interest rate. In addition, the amount of the monthly installments can be individually agreed with the respective lender. Accordingly, solvent consumers can have higher repayment rates fixed, thereby minimizing the total term of the loan agreement and the total interest expense.
Conversely, there is of course also the possibility to keep the monthly burden of the repayment rates as low as possible, but this extends the term and the interest expense. The possibility of special repayments or a final installment should also be considered, as this can often significantly reduce the term.
Note: Auto installment loans also offer a good alternative to dealer financing when financing vehicles. In addition to often more favorable terms, a motor vehicle installment loan is usually quicker to obtain than vehicle financing through the car dealership. In addition, many retailers can also take advantage of cash payer discounts.
Tip: Stay flexible with additional options
Something can change quickly in life. Additional options are therefore not to be neglected. Does a bank clear you. For example, if a rate is suspended without interest accruing, this is worth a small interest surcharge. In comparison, also pay attention to the conditions of the residual debt insurance, if one is required. Short notice periods and premium refunds with small cancellation deductions are important.
What sums do consumers and private customers get?
The classic loan amount is between 1,000 and 75,000 USD. For such repayment loans, consumers and lenders usually agree terms between 12 and up to 84 months. Lenders generally do not require collateral to take out a simple installment loan. However, the creditworthiness of the borrower is queried, for example using Credit Bureau information. If the creditworthiness is not sufficient to take out an installment loan, this can still be initiated with the help of a guarantee.
As part of a guarantee, a third party undertakes to the borrower’s creditor to stand up for the payments agreed in the loan agreement. This is how banks protect themselves against possible default. To protect their profits, some banks also request that prepayment penalties be taken out. This is a fixed amount that must be paid by the borrower if the borrower wants to settle the remaining debt before the end of the loan term.
Conclusion: Compare skillfully and find cheap installment loans permanently
An installment loan is cheap if it offers you one of the best interest rates on the market. There are also other criteria. These include free full and partial repayments, cheap residual debt insurance, extras such. B. Rate suspensions as well as fair acceptance criteria and a customer-friendly application. The chance of such a loan increases significantly if a large number of providers are taken into account in the comparison. Loans with individual interest rates should definitely be included.