How can you get a cheap loan?

There are many reasons for borrowing, but all borrowers in the country have one thing in common: Finding a cheap loan .

But cheap can mean a lot and is not just about the interest rate.

In this article we would like to go into what constitutes a cheap loan and how you as a borrower can get a cheap loan in the country.

What is a cheap loan?

What is a cheap loan?

When talking about a cheap loan, you usually only refer to the interest rate. Because the lower a loan interest, the lower the total cost of the loan. But a cheap loan is also characterized by:

  • optimal conditions from on a long-term basis
  • the individual needs of the borrower

The personal and financial starting point and the creditworthiness of each customer have an impact on the possible loan agreement  in the country . Individual components of private financing, such as duration, monthly installments and the desired amount, are ideally adjusted by the intermediary so that costs are as low as possible. An honest and open exchange helps to assess the situation and to find the right financing partner.

When is the interest on a loan really cheap?

When is the interest on a loan really cheap?

In 2015, the Federal Council decided on a new maximum interest rate for consumer loans in the country. Thus, the new maximum interest rate of 10% officially came into force in July 2016. Since then, you can expect a maximum interest rate of 9.9% from all reputable credit institutions in the country. Anyone who exceeds this interest rate when issuing consumer loans is therefore not considered to be trustworthy because the legal limit is exceeded.

The minimum interest rate for loans in the country is usually 4.5% and the average interest rate is 7.5%. The financial institution decides on the definitive interest rate. The decisive factors here are creditworthiness and personal budget, which are calculated using a standard formula. This formula takes into account monthly income, expenses, and financial commitments.

The interest on a loan can therefore be assessed individually as really cheap . It is important to note in any case, however, the general loan conditions and not just the interest. In general, as long-term brokers, we only recommend cheap loan contracts that are characterized by optimal contractual terms and long-term overall solutions that are tailored to the personal situation.

Very important: your credit rating

Very important: your credit rating

In order to understand the importance of creditworthiness , it must first be explained what it actually means. The creditworthiness is the existing probability that a borrower can meet their own financial obligations. Generally speaking, it is about protecting the borrower from any overindebtedness. In other words, if a customer is unable to meet existing financial obligations, or only with difficulty, the probability of obtaining a loan is unlikely. In this case, one speaks of low creditworthiness .

Payment behavior also plays a major role in determining creditworthiness . In other words, how trustworthy is the customer that he can make his payments on time. In this case, one speaks of creditworthiness. In order to assess this, information is also obtained from the debt enforcement office regarding open debt enforcement or seizures.

All information regarding creditworthiness and creditworthiness, i.e. creditworthiness, is contained in the list (Central Office for Credit Information ). Every lender and bank checks each customer’s credit rating before deciding on lending.

Step by step to a cheap loan

Step by step to a cheap loan

First of all , you should estimate your own budget and have the necessary documents ready for a quick processing of the credit request. Because lending should never lead to overindebtedness.

In addition to the fully completed credit request, each bank also requires confirmation of the information provided, at least in the form of the last three salary slips and a copy of a valid ID . For self-employed persons (for at least two years) a copy of the last two tax returns is required. The financing request will not be processed further by the bank without these documents. If it takes too long until the documents are available, the request will be closed and you will have to make a new one. All credit requests are recorded in the list !

As soon as all documents are available, the customer’s personal starting point can be confirmed and the ideal financing partner can be requested from the intermediary. Usually, a credit confirmation can be made within 24 working hours and the contract can be printed out. In this case, one speaks of instant loans .

Via the credit intermediary for cheap credit

Via the credit intermediary for cheap credit

When looking for a cheap loan, the customer usually thinks of going to a bank or the Internet first . It is worth taking the time to search for the right partner because there are many financial institutions and credit intermediaries even more. But without making a comparison, it is impossible to find the cheapest loan in the country.

As a long-term credit broker, we have been working with financial institutions for over 30 years . The diverse range of services in the financial sector enables us to follow the constant market change. Together with the independence that we enjoy as intermediaries, we can respond personally to the customer and offer the best solutions. For loans, this means long-term favorable conditions and optimal contracts.