A new car, the purchase of a modern kitchen or the necessary modernization of your own home – such measures are often not financeable without taking out a loan.
Whether you are a private individual or a trader, with Good Finance’s comprehensive loan calculator you can quickly and easily find loans with particularly low effective annual interest rates from the best banks.
Benefit from the favorable exclusive interest that Good Finance can offer you in cooperation with partner banks. Little interest means lower total costs and lower monthly payments. Credit inquiries at Good Finance are non-binding and free of charge, and they do not affect your work.
With the list below we want to show you how high the savings potential is if you use a recognized online loan comparison.
The starting point is a borrowing of over 15,000 dollars
With a term of 60 months. The effective interest rates used in the list are not fantasy interest from decoy offers.
According to this table, the maximum savings potential is 1,080 dollars. The example shows: It is worth comparing credit offers from reputable banks with a financial check.
If you want to do sample calculations with different effective annual interest rates yourself, you can do this using the interest calculator.
To obtain realistic values, use the information from the representative examples that you will find below the respective bank offer.
Cheap loans and average interest rate
If you are looking for a loan with little interest, you will certainly have your own ideas about how low the annual percentage rate should be. But to be able to determine whether the interest rate is actually cheap, you need a benchmark.
The German Good Credit’s average interest rates for consumer loans offer a good benchmark.
The effective annual interest rate in August 2017 for loans with a term of more than one year to five years was 4.45%. If the term was over five years, the interest rate was 6.84%.
The Good Credit carries out monthly surveys, which it publishes with a time delay. The current values can be found in a PDF file. Here is the link to the statistics on average interest rates on loans.
If the interest rate offered to you is above the average values of the German Good Credit, this is an indication of the quality characteristic “loan with little interest”.
In this case, the offered interest rate is not low according to objective criteria. However, your personal situation is not taken into account. This means your creditworthiness and how the credit rating characteristics of individual banks are assessed.
If your credit rating is at the limit, even interest rates above the Good Credit’s average interest rates can still be cheap or low.
With Good Finance’s loan comparison, it is easy to find a loan offer that has a low interest rate, taking your credit rating into account.
You don’t even have to make multiple loan requests. One request is usually sufficient and Good Finance will provide you with the best possible loan offer.
Calculation bases for loan interest
Below we describe the most important factors that play a role in the calculation of loan interest.
The procedure is actually the same for all banks. But different weightings of the individual factors and competitive pressure often lead to significant differences in interest rates.
The following factors are generally included in the calculation:
The cost of providing the loan, including refinancing costs.
The forecast credit default risk of a specific lending transaction.
The expected profit from the lending business.
Costs of willingness to borrow, in particular refinancing
Processing and issuing loans incur costs. Banks will always try to cover these costs through effective interest rates.
Credit defaults are also reflected in costs. A small, if any, portion of the loans issued are not, or only partially, repaid, and there may be legal costs.
Banks of course have to get the capital for lending somewhere.
First of all, equity is required. The bank must cover part of the loans with its own money in order to be able to cushion potential losses from loan defaults.
The so-called equity ratio is based not least on how risky the banking business of a particular credit institution is. For example, 8% of all loans must be covered by equity. At least that was what Basel II intended.
The existing equity is included in the interest calculation. A high equity ratio can lead to cheaper, effective interest rates for customers.