5 avoid typical credit mistakes – that’s how it works
Clever consumers should now take advantage of the current low interest rates to cover their financing needs for longer-planned purchases or short-term increased spending. The terms of a loan are currently still particularly favorable, which is among other things due to the historically low interest rate of 0.05%.
However, many a potential borrower unwittingly puts himself in the way of stones. In order to actually get a loan as cheaply as possible, you should first check whether you might make one or more credit mistakes. We have summarized 5 typical mistakes in this post for you and inform about the backgrounds.
Credit Error 1: Underestimate the pitfalls of the credit line
The credit line is the beloved savior in distress and, according to a representative survey by Ipsos, is used by about 10% of Germans monthly and a further 8% even permanently. However, this type of loan should only be used by consumers if they are able to repay the money quickly. The reason is above all the enormously high interest rates, which banks demand for “fast money”. These represent an additional and, above all, unnecessary financial burden in the long term, which is why affected consumers will be forced to reschedule their debt. The interest savings through this are enormous. In addition, the borrowed money is controlled and repaid in small installments, so as not to burden the borrowers additionally. Consumers who decide to reschedule the MRP can, with the help of a rescheduling calculator, calculate in advance the interest savings and determine the currently cheap offer. Other reasons to reschedule the Dispo can be found in our blog article Dispo credit umschulden: 3 good reasons.
Credits 2: Too many zero-percent financings
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Another of the five credit mistakes is the zero percent financing. Although the offers of Media Markt and Co. are more than tempting, consumers should be wary here. Why are you asking yourself? Basically, any credit – no matter whether it is a credit line, installment loan or zero-percent financing – is entered in the Schufa. Read more on this topic in the blog post zero-percentage financing – seduced to consumption.
If someone takes several zero-percent financing in a shorter period of time, it can have a negative impact on the personal score, which is usually ignored when borrowing this type of money. You want to know the current amount of your score ? Score Kompass provides consumers with this information confidentially and above all free of charge. This service is so far unique in Germany. Quickly and easily, the first online credit check provides personal scores, so that consumers can see their creditworthiness at a glance. At www.scorekompass.de you too can have your own value determined. We are happy to answer any further questions about the credit check in our blog article How to check your credit rating for free now.
Credit Error 3: Do not specify a purpose
Many types of loans, such as consumer credit or purchase credit, usually have no earmarking, which means that the borrower can decide for himself and possibly only after payment, what the money is used for. However, if borrowers already know in advance the exact purpose of the loan, it can be saved properly depending on the amount of money collected! Because earmarked financing such as a car loan usually have significantly lower interest rates and thus allow more favorable terms compared to non-conditional loans. Already in the credit comparison, it is important that consumers specify the exact use in order to determine the favorable offer for them.
Credit Error 4: Expensive additional offers in the small print overlooked
A hasty signature under the recently approved credit agreement is another credit error that should be avoided. Even if one is happy about the accepted application and the payout can hardly wait, you should read the contract terms exactly like any other contract. Too expensive or obligatory residual debt insurance, an inadmissible processing fee for the loan or unfavorable conditions for special repayments are only a few points that should be checked before signing. Insurance companies in particular like to rate loans as compulsory and helpful, even though they are often not necessary. Even if the money is needed urgently, borrowers should take time to find a new and suitable offer in such cases.
Credit Error 5: Borrowing without a loan comparison
One thing is clear: you do not get money for free. But who wants to take a loan, should make sure that he himself does not give away. Or a loan without interest is considered a gift. Many consumers, due to ignorance or skepticism about offers on the internet, borrow from the bank without first comparing the many offers on the market. The result is usually higher interest rates. To avoid this scenario, you should inform yourself in advance about current offers and make a personal credit comparison. It compiles a list of all offers which are suitable for the individual details of the consumer. Typically, using an online comparison can yield lower interest rates and better terms.