Nominal interest rate
Loans are currently very cheap thanks to the low interest rates. Many who want to take out a loan are happy about it. But low interest rates do not automatically mean that you actually get a cheap one, and thus – in the opinion of many borrowers – a good loan. A good loan is not the only thing that makes up the nominal interest rate , not just the nominal interest rate given to the lender. Especially the people with limited financial knowledge often make a mistake.
Nominal interest rates only state how high the interest rates for the loan offered are per year. Nominal interest does not include all costs. Such expenses as processing fees, disbursement costs, repayment periods etc. are only received in the annual percentage rate. To put it simply, it can only be said that the entire monthly repayment rates including all costs can only be calculated with the help of an effective interest rate. In this respect, you should always compare the various loans with the help of an effective interest rate. Because only the low effective interest rates make a good loan.
Good credit is the fixed interest
Another characteristic that speaks for a good credit is the fixed interest . Since interest rates are still low at the moment, fixing interest rates for a longer period is very advantageous financially. Because only this step can guarantee that a loan does not become more expensive with the interest rate increase, and thus your own planning security is maintained.
Not everyone can offer loan collateral to a lender . But some loans automatically include such. One example is a car or property purchase. The following are examples of collateral for the bank:
- the vehicle or
If such a loan cannot be repaid, the banks automatically acquire ownership. That is why such loans are usually cheaper. Savings deposits and guarantees also ensure that loan interest rates can be offered lower than the average.