Loan conditions - meaning and contents
In the steadily growing market of loan providers, the most important comparison values for comparing two offers are the loan conditions of each loan offer. These loan conditions, also called loan terms, are generally all legal and financial conditions attached to the granting of a loan. They define the rights and obligations of both the lender (such as banks) and the borrower.
Unlike the general loan terms, the loan conditions refer only to the framework conditions of the loan, not to all other legal relationships between the parties. Which points are addressed in the loan terms depends on the respective lender.
According to law, however, at least the following points must be contractually clarified in the conditions:
- amount of the interest rate,
- amount of the disbursement rate,
- the duration of the fixed interest period,
- the start of repayment and the corresponding repayment rate,
- the amount of the commitment interest and
- the total of any processing fees.
The interest rate indicates by how many percent the amount of your loan increases within a certain period of time. If you borrow 100 euros from a bank and its loan conditions set the interest rate at 1.5 percent per month, you will owe 101.50 euros after one month. The disbursement rate, also called the disbursed amount, is the borrowed sum plus interest (also loan interest) plus any ancillary costs that may arise for the loan. It therefore denotes the actual amount that must be repaid by you. The term "effective annual interest rate" is often used for this.
The MAXDA loan conditions and a representative example can be found here: MAXDA conditions
Which ancillary costs are included in the loan conditions?
Ancillary costs incurred when granting a loan can include, for example, processing fees, notary fees or appraisal fees (appraisal fees are incurred when the value of a property or another tangible asset needs to be appraised). The fixed interest period in the loan conditions determines how long the loan interest remains the same (i.e., fixed) and from when it may be increased or decreased and recalculated by the lender according to the current situation on the financial market.
The start of repayment specifies the date from which the installment loan must be repaid and the repayment rate describes the installments in which this repayment takes place. Both the number and the amount of the installments are determined. The amount of the installments can also influence the term. If the borrower can pay higher installments, the loan will be repaid faster and the term will thus be shortened. The commitment interest, which also counts among the ancillary costs described above and whose amount must also be specified in the loan conditions, is required to enable the lender to refinance and to secure themselves until the loan is repaid. As a rule, it only applies if a longer period of time elapses between the conclusion of the loan agreement and the disbursement of the money to the borrower.
By law, the lender is obliged to keep the entire loan amount available at all times during this period. It therefore cannot be profitably invested by them and, as compensation for this, the lender charges commitment interest, which flows into your disbursed amount.
Average loan conditions
The individual loan conditions vary greatly between lenders and depending on the financial situation. Most sub-conditions fluctuate, viewed over a larger area, around an average. Interest rates are different, however — they vary widely and also depend on the amount borrowed and the borrower's security. The installment amount and number vary depending on the borrower's personal needs and the lender's conditions.
Some lenders allow repayment staggered in up to 84 monthly installments, depending on the borrowed amount. The amount of ancillary costs, which ultimately affect the disbursed amount, also depends heavily on the lender. Notary fees alone can be recorded in the loan conditions as one percent of the borrowed sum.
Lenders such as banks are legally obliged to specify all ancillary costs of a loan in the conditions — so you should not be surprised. A fixed interest period is possible for three, six or 12 months, depending on the lender. Some lenders fix the interest for the entire repayment period, which offers special security.
For the borrower, it is always advantageous to compare the different loan offers or loan conditions. Because a comparison of providers can save a lot of money. Therefore, for an optimal loan comparison, submit a loan request to different providers.
Our loan conditions
We place particular emphasis on fairness — your trust is important to us, so we make an effort to give you a good feeling when you apply for a loan with us. Our interest rate starts — regardless of the term of your loan — from 3.99 percent. This interest rate is, according to our loan conditions, fixed for the entire duration of your repayment and does not fluctuate with developments on the financial market. For you, this means that you already have a clear overview of the costs of the loan at the beginning of your repayment and will not be surprised by changes in the financial market when your interest rate suddenly rises.
We have set the start of loan repayment to four weeks after receipt of the money. Your repayment therefore begins on the 1st or 15th of the respective month. The amount of the monthly installments is individually and fairly adjusted to your needs and cannot be stated in general terms. The installment amount strongly depends on your own creditworthiness, i.e., how high your income is and how much of it you can use for the monthly installments. Particularly good creditworthiness always helps the borrower to get a loan approved. Creditworthiness is usually clearly visible to lenders such as banks via a query at Schufa. General creditworthiness can already be checked via Schufa.
Immediate repayment, that is, repaying the entire loan plus incurred ancillary costs in a single payment, is also possible at any time and without restriction under our loan conditions.
Because we want to help you quickly and fairly and know that money is often needed at short notice, we handle your loan application or loan request unbureaucratically and within a short time. This keeps the ancillary costs pleasantly low for you and enables us to negotiate individual loan conditions with you. With us, everyone is treated fairly and receives an installment loan that is tailored to their personal needs as far as possible.
If you have further questions about our loan conditions, the meaning of individual contractual components in general or personal adjustments of our loan offers to your needs, contact us. We will be happy to help you.