Actually, the loan should be standard without fees. At least as far as the fees for processing consumer loans are concerned. Here the BGH decided for the consumer. The loan without processing fees should have existed since 2004.
Consumers can request processing fees already paid back up to 2004. That triggered a violent rush at the banks. This is not about peanuts. Between one and three percent of the loan amount had to be taken by consumers who were not granted a loan without fees. You are now entitled to request this amount back from the banks, including interest.
A loan without fees is cheaper
When comparing different offers, the effective annual interest rate is the reference value. In addition to the interest, the effective interest rate also includes all fees that banks charge for loans. In addition to the processing fees, which may no longer be charged, other fees may apply. For example, a provision fee for real estate loans.
The lower the annual percentage rate for loan offers to be compared, the cheaper the loan is for the consumer as a whole. All fees that may apply are integrated into the effective interest rate. With one exception, the cost of residual debt insurance is not reflected in the APR.
When comparing different offers, it makes sense to use the offer where the effective interest rate is the lowest. This cannot always be seen by the consumer directly from the credit comparison. As soon as banks advertise interest based on creditworthiness, the loan seeker sees the advertised low interest. However, this does not have to be the interest rate that is eligible for his loan. The concrete effective interest rate can only be determined when the consumer has a personal offer made.
What it is about interest rates dependent on creditworthiness
Credit-related interest rates have the advantage that banks can advertise with a very low effective interest rate. It does not matter that only selected borrowers receive this interest. The bank will be at the top of the credit comparison and therefore selected by many customers for an inquiry. The chances that loan agreements will be concluded are comparatively higher than for banks that advertise with a fixed interest rate that is significantly higher.
Nevertheless, it can make sense for consumers not to get on the first offer. A loan without fees is not everything when it comes to taking out cheap loans. The APR should also be as low as possible. Loan seekers can only find out which bank makes the best offer if they have multiple offers created. It is not necessarily the lowest interest rate that the bank advertises the lowest. The creditworthiness of customers is evaluated differently by banks, so that a customer pays interest of 7.99 percent for one bank for 10,000 USD and 9.99 percent for another bank. Although the latter bank is advertising lower interest rates.
Only when consumers are willing to invest some time in a solid and free loan comparison will they be able to save money on debt. Three personal offers should be obtained in order to make an optimal personal comparison.
If banks then want to sell residual debt insurance in connection with the loan, borrowers should insist on getting the loan without residual debt insurance. Residual debt insurance is a cost item that can make a loan considerably more expensive. This is usually opaque for the consumer because the amount appears extra and does not change the effective interest rate. It is worth taking a look at the rate here. With residual debt insurance, the rate is usually noticeably higher.