The business of banks is to lend money. They earn nothing with customers who only place their money with the banks. That’s why they roll over to win new customers. This may be positive for the consumer, but should not be blinded by advertising. There are cheap loans from the banks, but the individual offers differ considerably from each other. So what is there to consider?
Nominal interest rate and APR
In advertising, the nominal interest initially catches your eye. But this is just the pure interest rate. The effective annual interest rate is more important because it tells you how high the interest rate actually is. A loan also incurs processing fees or other administrative fees. These are included in the annual percentage rate. Ultimately, this is the interest rate that the customer has to pay and is added to the loan amount.
What about the conditions?
Anyone looking for cheap loans from the banks must also pay attention to the conditions. They may not seem so important at first, but we want to go into more detail here. There are months when money is particularly tight. Mostly this is January, because then insurance for the car or household items is due.
To top it all off, the utility bills also flutter into the mailbox. Now it would be nice to be able to suspend the rate at the bank. This is exactly what some banks offer for free. A free repayment month, who doesn’t want that?
Another issue that is also important is prepayment penalty. This is a fee that banks charge if a loan is repaid early. This causes the bank to lose interest, which they want to compensate with a prepayment penalty. Some people ask for so much money that it is questionable whether the loan should be paid early. But here too there are cheap loans from the banks, which do not do this. A comparison is not a waste of time, but very important and valuable, because it helps to save money.