Installment loan comparison – Find favorable conditions in comparison

Among all loans, the installment loan is one of the most popular and most frequently chosen loans. But there are serious differences when you compare the interest rates and contrast the different installment loans.

FAQ about the installment loan

What is an installment loan?

In banking, an installment loan is the colloquial term for a loan that is repaid to the bank in installments that are fixed in time and of a constant amount.

What is the difference between a framework and installment loan??

These types of loans differ in loan amount, disbursement, repayment and term.

How does an installment loan work?

With a loan, you borrow an amount of money – usually from a bank – under certain conditions. You have to repay it within a certain period of time.

To do this, you need to clarify with the bank in advance what the money is needed for and how high the amount will be. In addition, your creditworthiness is also checked.

In order to secure the advantages of the installment loan, you should explicitly compare and contrast based on your personal criteria.

The uncommitted acquisition loan offers a lot of leeway in the monthly installment amount and in the term. But to decide really favorable and exclude disadvantages in the installment loan, a lot of expertise in the comparison and the concrete comparison of individual advantages and disadvantages are important.

First and foremost, you should choose a loan that fits your planned purchase and your financial capabilities. The higher your credit rating is classified, the more favorable you can apply for the installment loan and the more convincing the interest rate will be.

The advantages of installment credit

A great advantage of the installment loan results from the fixed term and the interest rates fixed at the conclusion of the contract. You do not have to expect that a purchase loan will increase in price during the term and thus impose restrictions on your financial background.

Tip

You can schedule the term between 12 and 84 months, depending on the provider and the loan amount, although it is worth choosing the term as short as possible.

It is equally advantageous to have an installment loan between 1.000 and usually 50.000 euros is feasible and is suitable not only for small, but also for large purchases.

Very often this loan is chosen, for example, for modernization or renovation, to buy a car or to use for a vacation trip. Whether you get rather advantages or disadvantages, is primarily related to your credit rating. The better your Schufa score is, the more favorable the installment loan is.

It can therefore be worthwhile if you request a Schufa report before applying and take a look at your score value. Even a few small measures to improve your credit rating create a harmonization of the advantages and disadvantages that an installment loan brings with it.

The installment loan disadvantages

Like any loan, an installment loan can also have disadvantages. This is largely the case if you pay higher interest rates or choose a term that does not fit your financial background.

Since it is a non-purpose loan, the installment loan is generally higher interest than, for example, a car, renovation or rescheduling credit.

For this reason, you should carefully consider whether an installment loan is worthwhile in your case or whether it is possible to use financing via another loan. In principle, an installment loan does not have to bring any disadvantages with it.

However, it is different if you do not make the comparison comprehensively and conclude an installment loan this way, which leads to problems during the term of the loan.

It is also important to remember that the installment loan is not characterized by high flexibility and usually excludes free unscheduled repayments or a change in the repayment rate.

Comparison of the advantages and disadvantages of the installment loan

You should pay the greatest attention to this comparison to the installment loan. Here it is advisable to note the pros and cons, i.e. the advantages and disadvantages, and to compare them.

If you want to secure the installment loan advantages, you should weigh particularly carefully.

Otherwise it can be that the advantages are cancelled by installment credit risks and you select a loan, which is in the end much too expensive. You can get an installment loan in a smaller amount even if the credit rating has some difficulties and the Schufa may contain some entries.

However, the interest rates for your purchase loan are then adjusted, which can lead to an increase in price and cloud the transparency in the comparison. It is also important that you make a comparison to the effective annual interest rate in addition to the debit interest rate.

Only if you have the entire interest rate and all possible additional costs for the installment loan in mind, you can decide positively to your advantage and profit from an installment loan.

What distinguishes a favorable acquisition credit?

You can recognize a favorable installment loan by the fact that the debit and effective interest rates are convincing. You can repay the acquisition loan in the period of time you want and by determining the term, you can settle pleasant monthly installments that can be repaid even in special situations.

With a reputable provider, you get the installment loan without any additional costs outside the interest charge.

This means that you do not have to take out residual debt insurance for this loan and consequently do not have to repay an additional 10% fee.

In a comparison, you can see which installment loan suits you and where the advantages and disadvantages are arranged so that the former outweigh the latter and you personally do not suffer any disadvantage.

What sums are possible with the installment loan?

The banks grant the installment loan in different amounts. In principle, you can start from amounts between 1.000 and 50.000 euros will go out. Occasionally, an installment loan is also below, or with a higher sum possible. Whether the purchase loan is approved depends on your creditworthiness.

With a smaller sum, this is not checked as strongly as with an installment loan, with which you exhaust the quota per credit customer and apply for the maximum amount. Since the installment loan is also an interest-bearing loan, the amount should be chosen according to the need and not with a focus on more financial freedom.

Attention!

Unfortunately, many consumers have fallen for this fallacy that the installment loan is so cheap that you can also use it for more financial flexibility and easily pay the monthly installments.

The interest: effective annual interest rate and debit interest rate in the attention

Even though the debit interest rate comes into focus first, it is not the only interest rate you need to factor in for your installment loan. In addition, there is the effective interest rate, which ultimately decides whether the offer is favorable or too expensive.

Only if you compare the totality of interest rates, you will recognize a favorable installment loan and apply for it in preference to a too expensive installment loan.

The examination of the conditions is based on the calculation of all costs that are related to the installment loan and denote the sum that you have to repay in the end within the term of the loan.

Therefore, you must also make the comparison for the entirety of all expenses and not only the debit interest rate in the focus have. Be aware of the fact that in a comparison, if you look at it correctly, you will be able to find a cheap installment loan without hesitation and exclude the possibility of paying more than necessary for your loan.

The creditworthiness determines the interest rate conditions for the installment loan

Before you start looking for an acquisition loan, you should find out about your creditworthiness. Even if you knowingly have no entry in the Schufa, a request for information is advisable. For the banks counts the score value, which is at best 100 points and thus at the maximum.

Every point below it increases the risk for the bank and therefore the interest you pay on the installment loan. Often it is only small details that remove you from a good credit rating. For example, if you have more credit cards or checking accounts than necessary, this can have a negative impact on your score.

Credit inquiries are also a problem, because they are in the Schufa for a year and in the case of a real credit inquiry three weeks by all banks are visible. It is better to make a request for terms and conditions when looking for an installment loan and clearly express this desire.

Also the inquiry of the conditions is noted in the Schufa. However, this information is only accessible to you and cannot be viewed by third parties.

When it comes to the pros and cons of getting an installment loan, focus on creditworthiness and know that the terms of your loan are largely based on your Schufa score.

Beware of residual debt insurance!

An important point in relation to the installment loan is the residual debt insurance. Some lenders take the conclusion of a credit default insurance as a basis to decide for or against you. You should know that you are not forced to take out such an insurance policy and that you can refuse this condition.