An important factor when choosing the right loan is, of course, the costs charged by the bank. For this reason, many borrowers are particularly on the lookout for an installment loan with no processing fees. However, an installment loan without processing fees does not necessarily have to be cheaper than a comparable loan with a processing fee.
Installment loan without processing fees is not necessarily cheaper
The processing fee is still charged by many banks when lending. Depending on the bank, this can amount to up to 3 percent of the loan amount. However, the processing fee is part of the APR. For this reason, it makes more sense to always compare the APR instead of looking specifically for an installment loan with no processing fees.
Because it is quite possible that an installment loan without processing fees is even more expensive than a loan with such a fee. This is always the case when higher interest is charged instead of the processing fee. However, if you compare the APR you will definitely find the cheapest loan faster. In Germany, all banks are obliged to state the annual percentage rate in their offers.
When an installment loan without processing fees is worthwhile
In one case, however, it may be worth it if the bank waives a processing fee. This is always the case if the borrower intends to redeem the loan early. Because in the event of an early redemption, the interest will be reimbursed to the borrower in proportion to a processing fee. It is therefore positive in this case if the interest portion of the annual percentage rate is correspondingly high. For borrowers who already know that they will pay off the loan early, it is worth looking for an installment loan with no processing fees.
Find the cheapest installment loan
In recent years, a large number of Internet portals have emerged on which you can quickly and easily find the cheapest loan. The functionality is the same for almost all portals. You simply enter the required loan amount and the desired term in the offered loan calculator. After just a few moments, the user is shown a large number of cheap loan offers. These are clearly sorted according to the annual percentage rate.
The great advantage of such an online comparison is the large number of loans that can be compared within a short time. The increasing number of direct banks is particularly taken into account. These often offer the most favorable conditions because they do not have an expensive branch network. In addition, a comparison can be carried out over the Internet day and night and the data is continuously updated.
In addition to the annual percentage rate, you should also pay attention to a few additional points to avoid hidden costs for loans. One point is special repayments. In any case, these should always be possible free of charge. It is also advisable if a bank offers to suspend a rate at regular intervals. This makes it easier for the borrower to bridge short-term financial bottlenecks.
If you want to redeem existing loans with the loan, you should check directly when comparing whether this is also possible. Not all banks offer installment loans to reschedule existing loans. The costs of a possible residual debt insurance should also be compared exactly. These differ considerably depending on the bank.