Redeem the loan early: Loan redemption with prepayment penalty

Consumer loans in Austria can in principle be repaid in whole or in part at any time before the agreed term expires.

Since banks, savings banks and other lenders miss out on future income if they are repaid early without an important reason, they may be entitled to compensation for unscheduled repayment – the so-called early repayment penalty. This fee varies depending on the interest rate, the digit loan amount and the remaining term of the loan.

Prepayment penalty depending on the type of loan

Prepayment penalty depending on the type of loan

First of all, the amount of the possible prepayment penalty depends on the type of loan and the contractual agreements. In Austria, the prepayment penalty usually does not play a role for borrowers with a traditional consumer loan.

Exception in Germany: In contrast to the banks in neighboring Germany, this is not calculated for an installment loan – the borrower only has to take the three-month notice period (under certain circumstances even with a six-month notice period) into account in order to obtain a new loan, a better monthly rate and to obtain favorable terms from another bank and good creditworthiness.

Loans with a variable interest rate can in principle be repaid early at any time without additional costs. Modern online loans also allow numerous special repayments and early repayment, as a rule, completely without additional expenses.

If, however an agreed fixed current interest rate of their loan, can annually usually only a certain agreed amount at no extra cost to be paid back prematurely. If the early repayment or a special repayment exceeds this amount, the bank may demand a prepayment penalty from the borrower. However, this “penalty” is limited to a maximum of 1 percent of the credit’s remaining debt.

Important for consumers: The compensation must never exceed the amount of the remaining interest that the borrower would have to pay up to the originally agreed term of the loan. If your loan contract contains incorrect cancellation instructions, legal steps are possible here.

A prepayment penalty with high prepayment interest is very popular, especially with older long-term mortgage loans. Ultimately, the contract is mostly about high residual amounts and long terms for early repayment, with which the banks calculate firmly in the budget of the cash register. A default, if you cancel and terminate the loan contract, is usually expensive.

Non-acceptance compensation: If the contractually agreed loan has not yet been paid out, this is referred to as a non-acceptance compensation. Incorrect cancellation instructions in the loan contract must always be observed and terminated.

Prepayment in mortgage lending

Prepayment in mortgage lending

The subject of prepayment for building loans is a special feature in Austria. Above all, building interest for the property has literally sunk in the basement in recent years. Many property owners who have financed their existing loan years ago, therefore, have to pay significantly higher monthly installments without low-interest rates than those who have only recently realized their new property with mortgage lending. But the temptation to quickly refinance your property without calculation also harbors risks.

When reorganizing a building loan – for example through a house sale or a better forward loan – builders must, therefore, count on a pointed pen. If the current bank or savings bank is entitled to a prepayment penalty, this amounts to between two and ten percent of the remaining loan debt in the case of building finance in Austria.

Since real estate buyers usually prefer the longest possible commitment, considerable sums quickly accumulate with a remaining debt of USD 100,000, which cannot always be outbid even with the interest savings of a currently very cheap mortgage loan.

Banks must not arbitrarily raise their prepayment penalties. For the calculation, the saved administrative costs, the saved costs of the risk default as well as the current interest rate, which financing would throw off in the corresponding period, have to be deducted from the loss, which results from a non-collected interest in the case of premature termination of the loan for the bank. This is easily the case with a prepayment calculator.

What is the best way to calculate my prepayment interest?

What is the best way to calculate my prepayment interest?

Many consumers are faced with this question before repaying their debt or rescheduling. Of course, this can be done by the current credit or bank advisor. Borrowers can also conveniently determine this themselves at any time in a few steps using a modern prepayment penalty calculator:

  • Enter the current remaining debt of the loan on the calculator.
  • Select the duration of the remaining fixed interest rate on the calculator.
  • Add the contractually agreed interest rate on the calculator.

Basically, several factors are decisive for the exact calculation of the prepayment penalty for the prepayment penalty calculator: This depends heavily on the current remaining debt of the loan, remaining debit interest and the agreed credit or mortgage interest are also decisive. In addition, there is the fact of the bound borrowing rate at which the bank can currently invest the repaid money.

Important for the calculation: You will find all the necessary information on the calculation in the prepayment penalty calculator in your current loan contract – if necessary, the bank must provide you with additional information.

Consumer credit: growth in decline in November 2018

The French Association of Financial Companies revealed in January the production figures for consumer credit last November, which offset the strong upward trend of previous months. However, the use of consumer credit has continued to increase continuously since 2015.

Revolving credit down

Revolving credit down

+ 2% The growth in consumer credit production in November 2018 is weaker compared to the jump that had marked the previous month (+ 9.2%)! This month of November therefore saw a more measured progression, even more if we exclude LOA operations (+ 8%), because conventional consumer loans made almost on the spot compared to the same period in 2017 (+ 0.7%). Three realities coexist there: the consumer loan affected experienced a positive month (+ 5%), personal loan changed little (+ 0.9%) and revolving credit experienced a decline (-3.4 %).

Things are moving in automotive financing

Things are moving in automotive financing

Auto financing accounts for almost a third of consumer credit production . It is made up of conventional allocated consumer credit and LOA operations for the acquisition of a car, for the purchase of a new or used vehicle. Among these four indicators, only one fell in November and in 2018 after eleven months: the consumer credit allocated to buy a new car (-5% compared to November 2017, -0.9% since early 2018) . The most dynamic is also the lowest in volume (39 million USD in November 2018): the used LOA (+ 30.2%), which still has some way to go, however, to weigh as much as used car credit (319 mns $ in Nov 2018, + 8.7%).

LOA drives growth in 2018

LOA drives growth in 2018

The end-of-year balance sheet is near, but after eleven months, we cannot deny a strong upward trend in 2018: + 5.9% for the production of consumer credit, to approach 39 billion USD. Growth driven by the LOA (+ 16.5%, $ 7.5 billion). The year was neutral for revolving credit ($ 9.1 billion), but remained very positive for personal loans (+ 4.6%, almost $ 13 billion) and allocated credits (+ 6%, 9.5 $ bn).

Home loan: Home loan calculator for your home purchase

As with any other loan, interest is payable on a home loan. Since the loan amounts are usually high and the terms are long, a low interest rate has a particular impact on the total cost of the loan for a home loan. When taking out a home purchase loan, you agree a so-called debit interest rate with your bank. For a certain period of time, you pay the interest rate set when the contract is concluded and you are protected against short-term interest rate fluctuations in the market. In Austria, fixed interest periods of 10, fifteen or twenty years are usually the rule. However, with some banks you can even have the interest rate fixed much longer. Since most home loans have not yet been repaid in full after the fixed interest period has expired, follow-up financing is usually necessary and customary. For this,

 

Securing and earmarking

credit loans

In contrast to the classic installment loan, home loans are granted with a so-called earmarking. You must actually use the money borrowed from the bank to buy or build the specified property – or to buy a piece of land. Special collateral is also required for each real estate loan. Banks in Austria also protect themselves against possible insolvency of the borrower when issuing home loans. Usually, this is done either through a mortgage or through a mortgage. With the order of the land charge comes a so-called land charge. The financing bank is ranked first in the land register until the mortgage loan has been repaid in full. In the event of the customer’s insolvency, the bank can use it to sell the property or property itself and retain the remaining debt. 

 

Home loan as annuity loan

Home loan as annuity loan

Loans for a house or apartment are usually so-called annuity loans. You pay your loan for the house purchase back to your bank in constant monthly installments. The repayment rate, also called annuity, always consists of an interest component and a repayment component. However, the ratio changes during the term of the house loan: if the interest portion is usually very high at the beginning, the interest burden becomes less and less as the remaining debt. As a result, the repayment share rises more and more in the course of financing. The initial repayment is usually given as a percentage of the total. Tip: Which repayment you choose should depend on the interest level and your financial options as a borrower. You should use the currently low interest rates for a higher repayment. Because: The higher the initial repayment rate, the faster you are debt free.

 

Other house financing costs

Other house financing costs

In addition to the annual interest rate on the building loan, you may also incur additional costs for a home loan. For example, so-called commitment interest, if you do not take your loan amount immediately, but after a few months. Or also a so-called prepayment penalty: These require savings banks and Co. as compensation for lost interest income if you terminate your building loan before the agreed interest period has expired. The property itself also incurs additional costs. For example, through taxes and insurance for house and land acquisition, the notary or the entry in the land register. Tip: When planning your house financing, include additional costs of at least 15 percent of the total. In this way, you are protected from sudden surprises and may avoid expensive refinancing.

Loan Interest Rate Comparison

If you want to borrow money, you can’t avoid paying interest. They are the remuneration that has to be paid for the temporary lending of capital. The amount of loan interest depends on various factors. Find out here how you, as a borrower, can get cheap loan interest.

How to find cheap lending rates

How to find cheap lending rates

Before taking out a loan, you should compare various loan offers in detail. This is the only way you can get an overview and find the best possible offer.

The easiest way to compare is through our loan calculator. Here you can compare loan offers free of charge and without obligation and contact the provider of your choice to obtain further information or even to take out the loan directly online.

When comparing, it is, of course, important to look at the interest, because this is the only way to find out how much the loan will ultimately cost you. You are usually shown two interest rates: the borrowing rate and the annual percentage rate.

  1. The borrowing rate is the interest a borrower pays on a loan to the bank.
  2. In addition to the borrowing rate, the effective interest rate also includes other factors such as term or processing fees. Since banks charge different amounts here, interest rates differ from bank to bank.

Why you should compare the effective interest rate

bank

If you compare different loan offers with each other, you should only use the effective interest rate, since this includes all additional costs. In addition to the borrowing rate, it also includes price-determining factors such as processing fees or the agency commission. It, therefore, includes all costs that are actually incurred for a loan and specifies these as a percentage of the loan amount.

Interest rate comparison is a representative example

Note that the percentage given in the comparison does not necessarily have to correspond to the interest rate you receive on the loan.

Rather, they are presented with an average value that corresponds to the interest rate that approximately two-thirds of the borrowers receive. Using these values, a sample calculation can be created that shows the average loan costs.

Low-wage earners, in particular, can expect the interest rate to be calculated much higher for you. The bank can pay the default risk accordingly expensive by setting interest rates higher.

If you want to know your actual interest rate, you must contact the bank directly. Based on your personal information, this will then create an individual offer. A large number of factors influence the conditions of your loan.

What loan interest rates depend on

What loan interest rates depend on

When it comes to investment opportunities, customers are looking for the highest possible interest rate in order to get a return on their investment. The reverse is true when looking for a loan – the interest rate should be as low as possible to keep the costs of borrowing the money low. However, various factors are decisive for the amount of a loan, which you as a borrower can even influence in part yourself.

For example, it is important that you regularly check that your Credit Checker entries are correct. Anyone who has no entries in Credit Checker and therefore no current loans or unpaid telephone bills increases their chances of a cheap loan. Check out our Credit Improvement Guide.

In order to determine your loan interest precisely, the chosen bank will use various factors. These include, for example:

  1. The loan amount and term
    There is a very simple rule here: the higher the loan amount, the higher the value that must be repaid. Because with a large sum, the bank takes on a higher risk that it can pay for accordingly.
    In addition, the term determines the interest on the loan: the longer the loan is paid off, the higher the risk that the borrower will default during the term.
  2. Credit Checker information
    When applying for a loan, the credit institution will obtain Credit Checker information about you. If unpaid loans or bills appear, this can have a negative impact on interest rates. It makes sense to check whether your Credit Checker entry is correct before you apply for a loan.
  3. Collateral
    If you can present various types of collateral, such as stock values ​​or savings, when you conclude the loan agreement, this has a positive effect on the loan interest.
  4. Usage
    If you would like to take out the loan for a specific purpose, such as buying a car or real estate financing, banks usually offer discounted conditions. The loan is then linked to the specific use and may only be used for this. The bank also uses the property acquired or the car as security.
  5. Income and employment
    It is not necessarily how much you earn, but how much of this income is freely available. The bank will, therefore, take a close look at your income and expenditure and offer you a good interest rate if income and expenditure are in a favorable relationship to one another. A secure employment relationship also has a positive effect. For example, an official usually has better chances of getting low interest on loans than a freelance artist. In addition, other factors such as age or place of residence can play a role. Favorable loans are more likely to be given to younger people between the ages of 25 and 40 since the risk of death is lower here. If you live in an area where there is a lot of negative Credit Checker information, this can have an impact on the interest rate.

Loan insurance: watch out for the confusion between disability and incapacity!

Home loan insurance covers at least the death and total and irreversible loss of autonomy of a borrower. But when a disaster occurs, the latter may have unpleasant surprises concerning the coverage of his insurer, because the precise definition of the guarantees is not always well understood upstream. Morality: it is necessary to study the question well in advance!

A race against time

A race against time

Three months: this is the period generally accepted between the signing of the sales agreement and that of the final act during a real estate transaction. During this period – which can nevertheless be extended up to eighteen months when it is entered in the compromise, the candidate for the purchase must find the financing and insure his mortgage. But this last point often appears more as a constraint than an issue for the borrower, who is tempted to go “to the simplest” rather than the most precise.

PTIA, a (very) restrictive guarantee

PTIA, a (very) restrictive guarantee

These are in fact two guarantees: death and total and irreversible loss of autonomy. The PTIA guarantee qualifies physical or mental disability before the age of 65, which deprives the borrower of any capacity to carry out a gainful activity. It is therefore a person who needs assistance in at least four acts of daily life (washing, dressing, eating and moving around). In the insurance lexicon, PTIA is assimilated to death and represents an extension of this latter guarantee, which justifies the payment of the capital under the loan insurance contract, with its automatic termination.

IPT, IPP: optional covers

However, this definition of disability may seem vague to borrowers who do not master the sometimes not understandable language of insurers. There is indeed a real nuance between the PTIA and IPT guarantee (permanent and total disability). The latter, optional, concerns substantially the same type of situation, but it is the disability rate that differs: between 66 and 99.9% depending on loan insurance contracts.

This can for example apply to blindness (85% disability rate) but not hearing loss (60%) or locomotion (65%), even less loss of a limb (30 % for one foot, 40 to 50% for one hand). For these handicaps, the IPP guarantee (permanent and partial invalidity) is taken into account.

Insurance delegation for tailor-made protection

Insurance delegation for tailor-made protection

The question of protection must be taken very seriously when looking for insurance, which should encourage the borrower to use competition to seek a tailor-made contract. The advice and support of a loan insurance broker are crucial in this regard, especially since it also allows you to benefit from advantageous pricing through the delegation of insurance.

Loans for debtors online

 

 

Are you in debt and do you need cash urgently? You don’t have a place to get cash? Be sure to consider a loan for those in debt over the internet.

Loans for those in debt over the Internet – what is it about?

Loans for those in debt over the Internet - what is it about?

What exactly are such loans for those in debt online? Is this a product worth paying attention? These are the questions that many people are asking themselves right now, especially those who are just hearing about such a product for the first time. We calm down, there is nothing wrong with it. On the contrary, it is a product that allows you to quickly get the cash you need.

Loans for those in debt can be found in the offer of loan companies, also known as parabanks or private financial institutions. The commitment is easily available, you can apply for it 7 days a week, anywhere, anytime because they are offered online.

Loans for those in debt via the Internet are characterized by a minimum of formalities. The lender does not require as many documents and attestations (eg earnings attestation, employment attestation, employment contract) as banks. As a rule, the only document required is a valid ID, on the basis of which a contract is subsequently drawn up. Filling out the application does not take more than a few minutes, the processing of applications has also been kept to a minimum, so you can find out in a few hours whether the loan was granted to us.

Loans for debtors online – for whom?

Loans for debtors online - for whom?

As the name suggests, this is a product targeted at people in debt. Therefore, anyone who has unpaid obligations, appears in the BIK database or other debtors’ registers, can apply for loans for those in debt online. The lender has really small requirements that everyone can meet.

Thanks to this, you can quickly get the cash you need, especially when you find yourself in a gate situation. We will avoid asking for support from loved ones. What’s more, they don’t even need to know about our financial problems, because you can do everything right away, from the comfort of your home.

A loan with a bailiff in a parabank – why should you reach for it?

There is more and more talk about a loan with a bailiff that can be found in a parabank. Why is this financial product so popular? Why is it worth reaching for a loan with a bailiff in a parabank? Below are some of the most important arguments!

Product offered by a trustworthy financial institution

Product offered by a trustworthy financial institution

First of all, we should start with the fact that a loan with a bailiff is offered by a trustworthy financial institution. As you know, there are many different types of financial institutions on the market, but not all of them are worth our attention. Why? Some of them use unfair practices in the form of large interest, commissions or costs related to the given commitment.

The result is that we often have to give back a multiple of what we borrowed. Fortunately, such practices are not used in trustworthy loan companies, which means that without worrying about our own safety, we can reach not only for a loan with a bailiff, but also for other financial products.

A loan with a small amount of formality

A loan with a small amount of formality

A loan with a bailiff is a financial commitment with few formalities. The only document required is usually a valid identity document. It is rarely possible for a loan company to expect the submission of additional documents. Thus, we avoid collecting employment or earning certificates.

The lender also does not expect to postpone bank account statements to confirm that we are receiving regular receipts. However, this is not all, it is also possible to ignore the fact that the lender does not verify his clients in terms of creditworthiness or credit history. Loan companies also do not check the debtors’ registers, so all formalities are carried out efficiently and without problems.

The product is available to everyone

The product is available to everyone

A small number of requirements is associated with the fact that a loan from a bailiff is available to anyone who is over eighteen and has a valid ID. Therefore, students, adults, pensioners and pensioners can take advantage of the loan. However, importantly, they can be people who do not have creditworthiness or a good credit history. The very name of the financial product may suggest that even people with debt collectors have a chance to get a loan.