A cash loan is usually taken out due to economic hardship or business necessity. The borrower becomes dependent on the bank with a cash loan. If the consumer makes mistakes when taking out a loan, this has far-reaching consequences. This “advisor for your cash advance” should help you to avoid these mistakes.
How the cash loan term increases the cost of your loan
Many only compare the loan amount and the »effective interest rate. As a result, consumers are trying to get a cheap cash loan. It doesn’t matter what the cash loan is needed for. Whether car, vacation or for business purposes. But the loan term is much more important.
The longer you pay off your cash loan, the more expensive it becomes. The flip side of the coin: the faster you pay off the cash loan, the higher the monthly loan installment. You should think carefully before signing the contract:
- What is the optimal loan term for you?
- What happens to the investment after the cash loan is paid?
- What are the major expenses during the loan term?
- You should also include unforeseen things in your bill.
Cash advance provider
Only trust banks that you know or have a good reputation for. We recommend that you research this carefully before borrowing. The Internet also offers help. Basically, the bank should have a German branch. This offers them legal certainty. It is also good to know: what experiences other borrowers have had in the past with their cash loan from this bank?
Cash loan contract
Before signing a cash advance, you should carefully check the following:
- The bank is registered in Germany.
- Can the loan contract be changed in advance?
- The bank waives an »assignment clause.
- Are the loan costs (not the loan interest!) Exactly defined in the contract?
- Is there a repayment schedule for your building loan.
Caution should be exercised if these points do not apply. In this case, it is better to find another provider for your cash loan.
Cash credit and repayment
Every reputable cash loan includes a »repayment plan. Alternatively, information about the number of monthly installments, the amount of the credit rate and the amount of the last credit rate is sufficient.
Don’t be afraid to ask the bank what happens if you are in arrears with your cash advance. This is the so-called goodwill test. Here, the bank should show up to 3 credit installments.
Cash credit and credit default insurance
Some banks offer their customers so-called credit default insurance in connection with a cash loan. This is said to B. in the event of unemployment continue to pay the loan installments for up to 12 months. But beware!
These insurance policies are very expensive. They drive up the cost of credit enormously. The monthly insurance contribution is based on the loan amount. Contributions of 50 or 100 dollars a month are quickly achieved without paying off the cash loan. It becomes very critical if the bank makes such insurance a condition for a cash loan.
In this case, we advise you to “steer clear”. Unfortunately, these methods of selling a cash advance are not uncommon. This affects not only small but also large and well-known providers. Think about whether a credit default insurance really makes sense for your cash advance. Note that the cash loan remains affordable for you.
Cash credit and interest
In addition to the loan term, the cash credit interest rate is the factor that has the greatest impact on the amount of the loan rate. But interest is not the same as interest. A distinction is made between »nominal interest and effective interest. The amount of loan interest also depends on its credit rating. This means that not everyone gets the same interest from the same bank. Bank advertising is particularly tempting.
Don’t let this tempt you. Most of the time you don’t get the advertised loan interest. Less than 3% of all borrowers have a small chance of getting this advertising interest. It is therefore not decisive with which cash loan interest the bank advertises. What is more important is how high your personal loan interest for your cash loan is.
Debt cash advance
Favorable cash loan interest rates entice debt restructuring. It often seems that this or that offer makes your building loan even cheaper. Here, you should definitely consider some facts. If you are rescheduling a cash advance, additional costs will arise. A renewed closing fee or other fees that are charged for a cash rescheduling. Is the loan term the same? The cash loan is apparently cheaper by extending the loan term. In reality, the cash loan only gets more expensive. After all, you pay interest longer.
What are the borrowing costs? It is not uncommon for horrendous fees to be hidden in a cash loan contract. For this, providers like to make the loan interest very cheap. No matter how the costs are defined. Whether interest or loan fees. The bottom line is cost.
To determine if cash advance debt rescheduling really makes sense, compare the total cost. What did you really pay for your cash loan in the end? To do this, add up all credit installments plus all loan fees and other costs. How to calculate what your cash loan really costs. You will be amazed at the result.