The loan calculation is an important part of every loan comparison. Here, the immediate costs are determined and compared. Many comparison portals offer the credit calculation online. But not every online loan calculator takes into account the different interest rates. Why you have to pay interest at all, what you should know about credit and interest and what you should pay attention to a loan calculator, you will learn in the following guide!
All facts about the topic “Credit Calculation” at a glance:
- Lending rates are a rental fee
- The key interest rate, the competition and the creditworthiness of the customer influence the lending rate
- The interest can be paid monthly or final
- Interest may be expressed monthly, annually or as a total interest
- In addition to interest, other credit costs may aris
1. Why pay interest at all?
No matter whether you take a loan from a bank or another financial service provider, you have to pay interest everywhere. In a loan, you borrow as a borrower – debtor – money from a lender – creditor. For the loan period, the lender requires a rental fee, which is referred to as interest. The exact definition of interest is, according to the third edition of the economic lexicon by the beck economic adviser in the dtv: ” price for the release of money as a loan, which the debtor must pay to the creditor. “
Theoretically, the amount of interest is a matter of negotiation between the debtor and the creditor. This is especially common among private lenders. But here, too, the creditors are required to abide by the rules of commercial honor and not to exploit the possible ignorance of their debtors and to over-exploit them. Nevertheless: contract is contract! Therefore, you should inform yourself before signing the contract about the current interest rate.
As a rule, the lending rate is adjusted to the base rate and is a few percentage points above the interest rate. This means that borrowing money is always more expensive than investing money. The key interest rate is announced by the European Central Bank. It serves as an instrument to artificially regulate inflation and economic power. He is currently at a record low. Thanks to worldwide networking and communication, creditors from all over the world are under enormous competitive pressure. Thanks to new credit methods, such as crowdfunding or platforms that bring private lenders and borrowers to each other, the financial service providers are experiencing an interest rate hike.
The risk of being cheated is now as low as it has not been for a long time. The ever more detailed data collections make it possible that not only intelligence services, but also credit bureaus have sensitive data of the debtors and classify them according to their behavior as trustworthy or not. These are, on the one hand, the private credit, but also other private credit bureaus inside and outside Germany. The assessment of these credit bureaus with regard to the creditworthiness of the creditor is decisive for the amount of the interest rate.
The creditworthiness of the creditor contributes significantly to the amount of the loan
This is true not only for crowdfunding and credit intermediaries, but also for the big banks. The worse the valuation, the higher the interest rate is estimated. After all, the creditor buys with the payment of interest a piece of confidence. The lower the basic confidence in the creditors’ ability to pay, the more expensive the risk taken must be paid.
Lending rates are lending fees to the creditor. The amount of interest depends on various criteria, but is roughly made up of the key interest rate, the pressure of competition and the creditworthiness of the creditor. It basically does not matter which form of lender it is.
2. Which interest invoices are there?
No matter how you calculate a loan and its installments, the lending rate is always proportional to the loan amount. Now, there are various forms of repayment of a loan. This is the bullet loan or the annuity or repayment loan. The last two loans are discussed in great detail in the counseling loan repayment.
In the case of a term loan, there is the option of monthly interest payments during the term, but the loan is repaid as the sum at the end of the term. In addition, it is also possible to pay back the loan amount together with the interest payments at the end of the repayment term. This form of loan has the enormous advantage that the debtor can let the capital accumulated during the term itself interest and interest. For the creditor, however, this means a huge risk, because he learns only at the end of the loan agreement, whether the debtor actually fulfills its obligations.
Another form of repayment is the annuity loan. For this loan, the monthly burden is always the same. Over the term of the contract, the proportionate repayment amount increases and the proportionate interest amount decreases. Simply put, over five years, 100 euros are paid monthly. At the beginning, these 100 Euro consisted of 90 Euro interest and 10 Euro loan repayment. In the last installment, the interest is only 10 euros and the loan repayment amounts to the last 90 euros.
The situation is different with a repayment loan. Here, the repayment amount is constantly the same, but the interest amount decreases as the loan amount goes down. For example, a loan of 4,800 euros over two years will be paid. The monthly burden amounts to 200 euros, the interest is 10 percent. With the first installment, in addition to the repayment of 200 euros, 480 euros have to be paid. After one year, the repayment amount still amounts to 200 euros, the interest amount, however, only to 240 euros. And at the last installment 200 Euro repayment and 20 Euro interest are due.
Of course, the monthly charge is highest for the repayment loan first
Especially with online financial statements, the creditors should read exactly what charges actually come to them and how the interest is composed and what he refers to. This often makes a comparison on the basis of the credit calculation difficult. Being able to calculate credit interest is usually associated with a lot of lateral thinking. Carrying out a loan calculation online offers a welcome help. But if you can always rely on that, see the next section.
There are several ways to repay a loan. For all, interest payments play an important role. These are usually based on the remaining loan amount, unless it is a bullet loan. In the case of term loans, the interest is either broken down to the months or paid back in total at the end.
3. What should be considered with the interest calculator!
Nearly every financial service provider offers their customers to calculate the desired loan with a monthly charge. There are also numerous comparison calculators, which perform the credit calculation online and compare the loan offers of different creditors. However, a direct comparison of the various providers often turns out to be difficult.
Once there are those who only specify the monthly interest, those who indicate the annual interest and those who specify the total interest. The total interest rate is the effective price when you add up the interest payments and put them in relation to the loan amount. This is also gladly sold to the customers as the total cost, but unfortunately it is usually not that easy.
Whether it’s short-term or long-term loans, lending it alone is not enough. Especially the cheapest loans often have hidden costs, which only become noticeable during the loan period. This can result in severely limited service or high fees for special repayments or early loan repayments. These are all factors that must be included in the decision.
To use a credit calculation as a decision aid is relatively difficult. Here are above all different information an obstacle. In addition, the level of the interest rate alone should not speak for or against a particular loan offer. Here, all costs have to be compared.
4. Conclusion: The lowest loan rates are not at the same time the best loan offers
Lending rates are demanded by the creditors as a kind of rental fee. The amount of the interest is composed of criteria such as the current interest rate, the debit interest of the competition or the creditworthiness of the debtor. The monthly interest payments are usually dependent on the amount of the remaining loan amount, unless it is a bullet loan. The lending rates can be calculated in order to perform an objective comparison, is usually a complex task. Here it is advisable to carry out the credit calculation online with the help of a loan calculator. Borrowers should check our 2019 bank loan comparison for favorable lending rates. Overall, however, one should pay close attention to the actual comparability of the data. In addition, the loan rate alone is not a sufficient decision criterion, since other costs for the calculation of credit also play a role.