Anyone who is currently interested in a loan, the financial market currently finds particularly favorable conditions for a loan – of whatever kind. The reason for this is the current low interest rate situation, which is due to the current low of the so-called interest rate. Because this low interest rate allows the banks in turn to obtain cheap loans. So, as a consumer, you can find very good conditions to meet the financing needs of longer-term purchases or short-term increased spending with a cheap loan.
However, to actually get a loan or loan as cheaply as possible, one should first comprehensively inform oneself about the dangers and pitfalls of premature borrowing. We have summarized the 5 typical mistakes in too early borrowing:
Error number 1: Underestimate the pitfalls of the credit line
Who does not know him, who does not have him: the credit line as an addition to the checking account. According to a representative survey by Ipsos, around 10% of Germans use the credit line once a month and a further 8% even permanently. However, this “simple” credit line has its problem and that is interest. Unfortunately, it is not uncommon for banks to demand up to 14% and sometimes more interest rates for the “fast” credit line. This type of credit should only be used as a consumer if you are able to repay this loan quickly.
Mistake # 2: Too many zero-percent financing / borrowing
Every day we meet these loan offers in the form of so-called zero-percent financing. Without a doubt, the offers of Media Markt and Co. are more than tempting. But as a consumer one should exercise caution here. Basically, any credit – no matter whether it is a credit line, installment loan or zero-percent financing – is entered in the Schufa. Taking several zero-percent financings in less time can have a negative impact on your personal score, which is usually not considered in this type of loan. A negative score thus equates to a negative credit rating and can have a negative impact on many areas of daily life.
Error number 3: Do not specify the purpose of the loan
Many types of credit, such as consumer credit, usually do not have a purpose limitation, which means that as a borrower and, if necessary, only after payment, you can decide what the money will be used for. However, if the exact purpose of the loan or credit is known in advance, depending on the amount of the loan, you can save a lot of money! It is undisputed that earmarked loans such as car loans often have a significantly lower interest rate than non-performing loans. In this respect, it can be a significant advantage from a financial point of view, if a purpose of use is stated when borrowing.
Mistake # 4: Overpriced expensive offers on the loan offer
A hasty signature under the finally approved credit agreement is another credit error that should be avoided. Even if one is pleased about the accepted application for a loan and the payout can hardly wait, you should read the contract terms exactly like any other contract. Too expensive or obligatory residual debt insurance, inadmissible processing fees or unfavorable terms for special repayments are only a few points that should be checked before submitting the signature. Insurance companies in particular like to rate loans as compulsory and helpful, even though they are often not necessary.
Error number 5: borrowing without credit comparison
One thing should be clear to everyone: There is nowhere for free or even for free and money never! And so: Who wants to take a loan, should make sure that no money is given away! Experience shows that many consumers out of ignorance or skepticism about loan offers from the internet prefer to have financing at the house bank without first having to compare the numerous, often better credit offerings in the market. The result is usually unnecessarily higher interest rates. To avoid this scenario, you should inform yourself in advance about current offers and make a personal credit comparison. This will compile a list of all loan offers that most closely match the borrower’s individual needs.