Credit Comparison Can Save Up To One Third in Interest Costs

One hears and reads it over and over again: Who in the context of a planned borrowing, which uses on the Internet numerous available tools for an on-line loan comparison, gives away unnecessarily possible savings in the borrowing costs. This as a statement certainly has its justification again and again by various institutions carried out market analysis.

Market analyzes show that credit comparison can save up to one third in interest costs

 Market analyzes show that credit comparison can save up to one third in interest costs

For example, the German Institute for Service Quality on the lending of retail banks in Germany has just recently stated that, for the branch banks that had just been examined 15 years ago, the difference between the cheapest and most expensive loans was up to seven percentage points.

It is not surprising that the DISQ here concludes its investigation that a loan comparison before taking a loan is “urgently recommended”. A recommendation, which is also underpinned by a large German comparison portal. For example, borrowers who use the credit comparison portal to compare the terms of more than 300 banks paid on average one third less interest than the average borrower in Germany. Turning that into concrete figures, it becomes clear that just by using a loan calculator and a loan comparison tool, you can quickly save a few hundred dollars, especially with higher loan amounts.

Credit comparison is worthwhile especially for loans with credit-dependent interest rate

 

But even under another aspect worth using a credit comparison and this aspect is called credit rating. Particularly in the case of loan offers with a so-called credit-based interest rate, there are also clear differences in the cost of borrowing. The reason is relatively simple to explain: Each bank uses its own credit rating system for a potential customer. Although this is always based on the credit rating of SCHUFA (or comparable credit reference agencies), each bank calculates the interest rate based on it differently.

An example: Based on the SCHUFA information, the customer receives a credit score of 92%, which is to be understood as a “credit note with a satisfactory to slightly increased risk”. As a result, Bank A effectively offers the customer a loan with a credit-linked interest rate of 9.5% per annum. Bench B from the credit comparison rates the score at 92% differently and sees the risk of a potential loan default significantly lower than Bank A. This means that the generally applicable interest rate for a loan is significantly lower. In plain English: The bank offers the loan at an interest rate of only 7.2%. Here, therefore, an interest savings of 2.3% could be effectively realized per annum through the credit comparison.

Conclusion on the subject of credit comparison

 Conclusion on the subject of credit comparison

The stubborn belief that the trusted house bank knows them better than any other bank as a long-time client may be helpful in difficult financial situations. However, when it comes to finding the most affordable loan, that bank is usually not the best and cheapest point of contact. Nor does the belief that all online loans are cheap per se and that the differences in online credit are rather marginal. A comparison of the loan conditions because so anyway not worth it. Numerous market analyzes repeatedly confirm the opposite. So it can not be emphasized often enough that both credit calculator and ultimately the loan comparison of various loan offers a “must” before actually taking a loan.