The most important information is the interest rate, which is the price at which a loan can be obtained.
An even more accurate measure of loan comparisons is the actual APR, which also takes into account other credit-related fees and the repayment schedule. There are also differences in speed: at best, a loan can be obtained in minutes, sometimes having to wait several days.
How do you find the right loan for you?
In addition to the interest rate, many factors influence the price of a loan:
- An account management fee will be charged for maintaining and managing your loan account. Usually you pay a few euros per month for account management. The amount may seem small, but especially in the case of small loans, the relative share of account management fees in the cost of the loan is significant.
- The start -up fee is a one-time payment to open an account, depending on the amount of the loan, from a few tens of euros up to a couple of hundred euros.
- The loan amount affects the total cost in two ways. A large loan often has a lower interest rate on a small loan, but on the other hand, the higher the loan amount, the higher the interest expense.
- Loan time affects the total cost of a loan more than many people think. Example: The bank grants a loan of $ 10,000 at a 10% interest rate and a monthly fee of $ 4. When the loan period is 5 years, the loan costs are EUR 2 988. At 10 years, the cost of the loan is EUR 6,338, which is more than double.
- Repayment gratuities may sometimes be chargeable, but the practices of creditors vary.
You can compare loans without applying for a loan on Good Finance
It is a good idea to compare your loans before applying for a loan offer in the Good Finance loan comparison, which helps consumers choose the right loan with data and genuine reviews. The service lists the pros and cons of different banks, lenders and also loan brokers. The site also reveals what kind of loan offer its test applicants received from various banks and loan services. Although the loan offer is mostly personal, it does give you a good idea of what kind of offer and experience you could get yourself.
Loan comparisons also illustrate, for example, how large loan amounts often receive a lower interest rate on small loans. With a loan amount of between $ 20,000 and $ 25,000 and a 10-year term, the effective annual interest rate may be as low as 10% or even less. On the other hand, with smaller loan amounts of $ 2,000 – $ 3,000 – which will be repaid in a few years – the actual annual interest rate is typically higher: around 20-30% depending on the lender.
Another point of comparison is how extending the loan term increases the total cost of the loan. The importance of this issue is emphasized especially in large loan amounts.
With a real annual interest rate of 8.82% for a loan of EUR 25,000 and a 10-year term, the borrower will have to repay a total of EUR 36,480. The total cost of the loan is thus EUR 11 480 . With another loan brokerage offering the same $ 25,000 credit at a higher APR of 10.07% per annum and a shorter 5-year term, the repayment is only $ 31,598. The total cost is therefore € 6,598 , about half the cost of a ten-year loan – despite the higher interest rate.
Loan comparisons also provide information
In addition to price examples, the valuable benefits of loan comparisons are the experience with the speed of the credit companies’ application process and customer service.
One key difference between banks and financial institutions is whether you need to sign up for a loan with a bank ID to apply for a loan. Some require identification already at the application stage, others only at the time of the loan. Some Credit Companies may also require Instantor verification.
You can also read about loan repayment experiences from loan comparisons. A large number of operators apply for a loan so that the applicant first receives a loan offer in their email which can be consulted in peace. For example, if the interest rate is too high, the loan does not have to be raised. Sometimes, however, after an approved credit decision, the loan is automatically paid into the account specified by the applicant without the offer having to be approved separately. At the fastest, you can get a loan in one sitting.
On the other hand, there are differences in customer service channels and quality of service. The most common customer service channels are telephone and email, but some also use chat, for example. Sometimes there is no response from customer service, and sometimes very quickly.