When it comes to borrowing, there are also, beyond the interest rate, various costs, which must be observed by the borrower. All additional credit costs must, if they are collected directly by the respective bank, be disclosed in the loan agreement. In addition, the individual borrowing costs have an influence on the annual percentage rate of charge, which must also be part of the loan agreement in accordance with the PangV.
Costs can be incurred in the context of borrowing at all? What is the difference between the individual costs of borrowing and can they possibly even be avoided?
Interest costs arise in connection with each loan transaction and are controlled by the interest rate. Depending on the amount of the loan, the amount of the installment and the resulting repayment term, the borrower pays a different amount of interest costs until the repayment of the loan.
The term “option premium” is understood to mean a one-time fee which a bank may require if a borrower is granted special rights and opportunities under a loan agreement. In the case of a personal loan, for example, it could be the calculation of an option premium that allows the borrower to change the amount of the monthly loan installment as often as he likes. In the area of mortgage lending, option premiums are primarily calculated if a borrower wishes for an extraordinarily high or, under certain circumstances, an unrestricted special repayment right.
The general loan processing fee was part of nearly every personal loan for years. In 2014 there were various BGH judgments, which retroactively declared the calculation of general and abstract processing fees to be inadmissible. In the past, banks have charged processing fees to enforce the burden of credit verification, contract preparation, and loan settlement to the borrower. However, as banks also price these services in the interest rate, the BGH declared the general processing fee inadmissible. Important: This regulation only applies to private loans without fixed purpose. For mortgage lending or building loan, the banks may therefore continue to work with processing fees.
The term “agio” is understood to mean a “premium”, ie an amount which is added to the loan amount at the beginning of the borrowing. A premium is always given in percent and is based on the amount of the loan. The borrower only has to pay the agreed loan amount, but starts repaying at a higher sum.
As expected, the discount is the opposite of agio and in this context a so-called “discount”. The discount is also stated in percent and is based on the loan amount. When a discount is incurred, the borrower does not receive the full loan amount upon payment, but a sum reduced by the discount. However, the repayment starts with the originally agreed loan amount, which means higher costs for the borrower.
The residual credit insurance protects the borrower against various risks such as death, unemployment or disability. For the Bank, the conclusion of a residual credit insurance is a great security, since the installment payment is secured by the insurance even in the event of default. In terms of costs, remaining credit insurances are generally paid through a one-off amount, which is added to the borrower at the beginning of the loan on the respective loan amount.
When it comes to dealing with credit costs, there are some tips and tricks that can help save money on borrowing. First of all, it is important to check each loan offer in detail and not only to look at the nominal interest rate. If the interest rate is to be used as the comparison value, then it is essential to look at the effective interest rate. It must be said that many borrowing costs are partially negotiable, so that in any case you should talk to the bank as part of the credit conversation, for example if it requires a premium or an option premium. Many banks provide in the credit report that they agree to the granting of an unsecured personal loan only if the customer at the same time takes out a residual credit insurance. Such “claims” are usually “old wives’ tales” and are provided by the banks mainly for reasons of earnings (the insurers involved pay the banks lucrative commissions for the conclusion of a residual credit insurance). In order to avoid taking out a residual credit insurance, one can either talk to the bank about possible substitute collateral, for example the assignment of existing life insurance credit, or put it into the space that there are other competitors in the market, even without the financial statements would agree to a residual credit insurance. Only then do you realize as a borrower whether the not necessarily cheap insurance for the granting of credit is really crucial.
For years, borrowers have accepted general processing fees, which have been charged especially for personal loans. From a bank perspective, abstract fees served to offset the expense incurred, for example, on loan processing and credit checks. The amount of the processing fees was completely abstract and was incomprehensible to the borrower. Among other things, these are the reasons why the Federal Court of Justice has meanwhile declared the general loan processing fee void in various legal rulings. Since 2014, borrowers have the ability to recover past processing fees from their respective banks. As regards the statute of limitations of these claims for recovery, various time limits have been introduced so that processing fees for loans concluded between 1 January 2005 and 31 December 2011 had to be recovered in writing by 31 December 2014. Since 1 January 2015, claims for repayment can only be asserted with respect to personal loans that have been concluded as of 1 January 2012. In the future, case law makes it unlikely that borrowers in the personal loan sector will continue to face general processing fees.
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