Anyone who wants to apply for a loan is well advised to compare the offers of the individual financial institutions. The differences are small, but depending on the amount of the loan, the borrower can save a few euros by making a comparison. This mainly concerns interest rates, which vary.
Cost savings at the online banks
A loan with favorable interest rate can be easily found through the search engines. In most cases, the house bank can not keep up with the offers of online banks. The problem is the high cost of rent, staff, energy. The banks have to recover these costs and that’s what they do about interest rates. Due to the absence of a branch network, the financial institutions on the Internet save these costs and can offer a loan with a favorable interest rate. This is convenient for consumers, because many find the consultant meeting with the bank unpleasant when it comes to the question of the purpose. Nobody asks about it on the Internet, unless it’s a real estate loan. Also such loans with a much higher loan amount and term can be applied for via the Internet.
Difference between annual percentage rate and standard interest rate
There are big differences between the annual percentage rate and the standard rate. The standard interest rate is the pure interest rate, which always refers to one year. Hence the term pa (per anno). The level of the interest rate is aligned with that of the Central Bank). If this interest rate rises, the banks will follow suit very quickly.
The APR includes the standard interest rate AND the additional borrowing costs that will be added to this interest. These can be agency fees or other fees. Often in the advertisement of the normal interest is applied. Small print can be found then the much higher effective annual interest. In order to protect consumers, the legislator has decided that both interest rates must be stated so as not to unsettle the consumer. So if you are looking for a loan with a favorable interest rate, you should always look for the APR.