General information about loan fees

In addition to interest, a borrower usually has to pay further costs for a loan. These are also referred to as ancillary loan costs, which vary depending on the type of credit. Every borrower should, in addition to an attractive interest rate, carefully inquire about the fees charged by the lending bank and include them in their decision. Some banks are very imaginative in naming the fees for processing and granting loans. For example, there are processing charges, processing fees, loan processing fees, loan charges and other fees and charges.

MAXDA loan fees

We at MAXDA work transparently: fees are only charged once you have actually received the loan — not in advance! Afterwards, the loan fees are included in the monthly installments. Credit inquiries at MAXDA are free of charge and non-binding, by the way!

Credit institutions are legally required to disclose in detail the fees they charge for a loan and to inform the borrower about them before concluding the loan agreement. Processing fees for a loan are no longer charged by reputable institutions before the loan is actually granted. However, loan fees are often due if the loan agreement is terminated early.

But fees can also arise during the term of the contract — this is especially the case if the borrower is granted a credit line that he can use at will.

Fees charged before the loan is granted

When a borrower applies for an installment loan, the bank or savings bank offering the loan adds not only the interest for the loan term to the loan amount, but also its own processing fees.

In some cases, account maintenance fees of the lending bank are also added, which are charged for the duration of the loan. These bank fees for an installment loan are reflected, together with the loan interest, in the annual percentage rate (APR).

Therefore, the APR should always be used for comparing loans and not the nominal interest rate. The nominal interest merely indicates which interest a borrower must pay for an installment loan; other costs and fees are not included in the nominal rate. Only in the APR will you find processing charges, processing fees, loan charges, etc., which are usually not charged as a separate payment but are added to the monthly repayment installments.

Fees from insurance

For security-conscious borrowers, banks and savings banks offer an optional credit balance protection insurance for most installment loans. Some credit institutions also call this loan life insurance. Different variants of this insurance are usually offered so that the borrower can decide which risks he and his family want to insure against.

One variant of the credit balance protection insurance, for example, continues to pay the installments in the event of job loss of the insured, while an extended credit balance protection insurance pays in this case as well as in the event of incapacity to work. In any case, the credit balance protection insurance takes effect in the event of the borrower's death and either covers the entire remaining loan amount or at least a part of it.

However, the premiums for the insurance represent additional costs that the borrower must pay. The borrower is also informed about the amount of the insurance premiums before the loan is granted.

Fees for early termination of the loan agreement

When a bank or credit institution grants a loan, it calculates the loan interest for the entire loan term. The credit institution therefore expects the receipt of the loan interest.

If a borrower wants to repay an installment loan before the agreed due date, the bank loses a profit that has already been calculated. For this reason, many credit institutions charge a so-called prepayment penalty for early loan repayment, which the borrower must pay as a fee.

In some cases, a processing fee for handling the early repayment of the loan may also be charged in addition to the calculation of a prepayment penalty. Even if the bank points out the calculation of the prepayment penalty, any borrower who is able to repay their loan faster than originally agreed should negotiate the prepayment penalty with the credit institution.

In many cases, as a gesture of goodwill the full prepayment penalty or at least part of this fee will be waived if the borrower asks.

Beware of unjustified fees for a loan

For some loans, the credit institution makes an inquiry with Schufa, the German credit protection association. Data about the borrower are queried here, which help the lender decide whether to grant the loan and, if so, on what terms. The costs for the Schufa inquiry are always borne by the lender, who may not charge them to the applicant.

Some borrowers look for a loan without Schufa for various reasons /en/topics/instant-loan-without-schufa. For a reputable offer of a Schufa-free loan, similar fees are charged as for a loan where the credit institution initiates a Schufa inquiry.

But there are also providers who promise a loan without Schufa but only issue further information or the loan documents against payment of a high fee. Consumers should be very cautious here, because it is not customary, for example, to pay a cash-on-delivery fee to receive loan documents.

Legal situation regarding loan fees

However, some bank fees are, according to rulings by various higher regional courts in Germany, not justified. According to the courts, a credit institution may not charge fees if it charges them for a service that is performed predominantly in its own interest.

This includes, for example, charging account maintenance fees for a loan account. Consumer advice centers advise borrowers to object to the charging of account maintenance fees and to reclaim these fees, even if they are only small amounts.

To simplify the objection process, the consumer advice centers provide sample letters that can be used to submit a formally correct objection.