Loan Interest Rates

If you want to borrow money, you have many different ways to get it as long as you are creditworthy. Here we want to show you the various ways you can get money and which interest rates you can expect. Let's start with the most expensive loan, the overdraft.

Loan interest rates - the overdraft loan

Many people are happy when they are granted a high overdraft limit. In reality, though, the bank is only allowing you to pay as much interest as possible. If you want to make a purchase, such as a new computer, you should never pay for it with your overdraft. Use other forms of financing instead, which we'll get to in a moment. The interest rate on an overdraft loan is between ten and twenty percent.

Loan interest rates - the installment loan

If you can't put off a purchase and haven't saved anything, you can take out an installment loan. You can get one online or from your own bank. Compare the interest rates and take the loan with the lowest effective annual interest rate. For larger loans, it is sometimes worth adding special extra rights to the contract so that you can repay a loan earlier than agreed in the contract. In 2017, the interest rate on such loans is below four percent.

Loan interest rates - the policy loan

If you have a life insurance or pension policy, you can borrow against its surrender value. That means you pledge the surrender value of a life insurance policy as collateral and can get a loan up to the amount of the surrender value. Sometimes you only get 80% of the surrender value. The advantages are, first, that the interest is extremely low, often under 3%, and second, that you can repay the loan whenever you like. You only have to pay the interest. This form of loan should always be your first choice before borrowing money elsewhere. You can get this policy loan either directly from the insurer or from various banks. By the way, you can also get a policy loan if you have a negative entry with Schufa (Germany's credit bureau).

Loan interest rates - why not a personal loan from a private lender?

There are plenty of intermediaries on the internet that bring private lenders and borrowers together at a favorable loan interest rate. Considerably more arrangements about repayment terms can be made here. The interest rate is also sometimes cheaper, because many wealthy private individuals no longer know where else to invest their money profitably. The interest rate is freely negotiable here.