Without a doubt: Online loans in Germany is steadily growing in popularity and for good reason, because they are simple and can be implemented quickly, without the need for time-consuming running around and can also with a “Round-the-clock orderable” functionality. Peace, Joy And Egg Cakes? With no means, because Online loans have their hooks and these show nowhere more clearly than with the lending rates. This is especially true for those financial institutions that have specialised in the granting of Online loans. The current study by the German Institute for Service quality (DISQ) shows how serious these interest rate differentials can be for the loans offered. The DISQ has examined a total of 9 providers specialised in the granting of Online loans. As already mentioned, the result shows significant interest rate differentials in Online loans among the audited credit providers.
Interest of up to 10% on Online credit
The basis of the DISQ study was to carry out covert telephone and E-Mail Tests as well as tests of the internet presence of the 9 banks under the headings “ease of Use” and “information content”. As a basis for the analysis of installment loans, the current offers as of 1 July 2018 were used on the basis of various credit characteristics, including the interest rate. For the DISQ study, the rate loan conditions of the individual providers were compared in three different test scenarios, inter alia on the basis of a € 20,000 installment loan with a maturity of 72 months. It was found that the so-called two-thirds interest rates, i.e. the annual effective interest rates, which receive two thirds of the customers of the respective credit institution, differ most significantly in this respect. For example, with the cheapest credit provider 2 out of 3 customers concluded such a loan with an effective interest rate of an average of 4.30 percent, where, on the other hand, the most expensive interest rate was a saturated 9.34 percent, i.e. more than twice as high as with the most favorable credit offer!
The Crux with the credit-related interest
It is interesting to note that in the study only those installment loans could be positively assessed, which did not match the interest rate level according to the creditworthiness of the customer. This means that the credit offers offered at the so-called credit-related interest rates are much worse. For the nine banks tested, only 3 of the 9 banks tested had installment loans with non-credit interest in the Portfolio!
The amount of interest not solely decisive for Online credit
Last but not least, the study shows that looking at the annual percentage rate of charge alone is not a sufficient evaluation criterion for a good credit. In particular, care should be taken to ensure that within the credit term there is the possibility of flexible repayment as well as special repayment options without additional costs. The DISQ study also shows that this is not the rule. For example, only 2 of the 9 tested credit providers offer a toll-free early repayment of the loan. Further information on the DISQ study can be found here.