Interest rates have fallen so sharply in recent years that the number of consumer loans has increased rapidly. According to the Astro Finance, the average effective annual interest rate in Germany for consumer loans with an initial rate fixation period of 1-5 years fell to 4.4% in December 2016.
Consumers who want to reschedule a loan in spite of poor creditworthiness will usually meet with rejection at the house bank. Since the poor credit rating is not based on the requirements for lending, approval of the application is not possible.
It is best to avoid this route and look directly at the free financial market. Here you can get a loan without creditworthiness and without checking the Credit bureau and rely on a low interest rate and flexibility in repayments.
For consumer loans with a maturity of more than 5 years, the average annual percentage rate was temporarily above 9% a few years ago, while it fell to 6.83% in December 2016. But it is not just the interest rate cut that is contributing to increased household borrowing. Over the years there have also been numerous legal changes in favor of consumers, which have made the conditions for borrowing much more fair and transparent: their credit advertising the effective annual interest rate that applies to at least two thirds of their customers, specify all conditions under which the offer is valid and, according to §6a PAngV, provide a representative sample calculation. Decoy offers with utopian low interest rates, which can only be used by a small fraction of customers, are a thing of the past.
Low credit costs, greater transparency and improved conditions
No wonder that more and more people in Germany are taking advantage of the opportunity to finance expensive purchases instead of saving for years afterwards. It is not only the new installment of installment loans that has increased significantly in recent years. More and more people are also using the low interest rate level sensibly to replace their expensive old loans with a cheap debt rescheduling loan. Borrowers can save three or even four figures through debt restructuring. For example, since June 2010, banks have only been able to charge a maximum of 1% of the remaining debt in penalty fees for early loan repayment, as long as the contract is still running for at least 12 months.The 2010 Consumer Credit Directive also regulated the level of penalties that banks charge for the loss of interest income in the event of early repayment of loans.