A loan without credit record often pays more interest and a higher repayment rate than a loan with credit record, and we explain why! `When someone takes out a loan, it should usually serve to improve the borrower’s liquidity in order to be able to finance various things. But with a loan, the borrower not only has additional liquidity, there are also certain costs associated with it, the cost of the loan. Credit costs can not be generalized, how high they will be, rather they depend on the credit and also on the bank with which you conclude. However, the greatest cost still comes from interest, which in turn depends on various factors, from which a percentage of the interest is then derived.The credit costs also include the interest payable on the loan, as well as various fees, such as a commission for the credit intermediary.
How does the interest rate come about in general?
A key factor influencing the amount of interest is, in particular, the key interest rate and the risk of the loan. When you talk about the risk of the loan, you mean the risk for the bank, because it takes a certain risk when it lends money, namely that it cannot get the money back – so it needs a certain amount of certainty that it will gets borrowed money again. In order to be able to assess this risk, a credit check is carried out on the borrower. This credit check also includes any credit record entries that are included in the check. If the bank decides after the check that there is a higher risk, it compensates for this with a higher interest rate.
Direct banks and the loan without credit record
One could say that the so-called direct banks have developed in this area of the market. Direct banks are mostly only subsidiaries of larger banks. You will hardly find any branches at direct banks; the structure of these companies is particularly via the Internet or freelancers. Direct banks, as you can read on their pages, often offer credit record -free loans – this is precisely the market in which they have established themselves. credit record -free credit means that no credit record information is obtained about the borrower when he wants to apply for a loan. For direct banks, this has also become a mainstay of their marketing. In this respect, they address consumers with acredit record -free credit who show a negative credit record entry and would probably not get any credit from a “normal” bank.
Higher risk for the bank with the loan without credit record
If the direct bank does not obtain credit record information, it naturally takes a greater risk, since the credit check is not complete or the validity of the credit check is not the same as with credit record information. Carrying this higher risk for the direct bank in turn means that it beats the interest rate – in this respect, you will have to pay ever higher interest rates on a loan without credit record . Direct banks grant an unsecured loan, so to speak, with a loan without credit record .It must compensate for precisely this risk and that is done through high interest rates.The higher interest rate alsogoes hand in hand with the fact that the repayment rates are significantly higher than with a credit record loan.Many consumers who take out a credit record – free loan usually have a credit default from half the term – but the direct bank can, despite this default make a profit. As the consumer has already paid back a much higher amount than half of the normal loan, up to half of the term, the failure of the loan is not a serious matter for the direct bank.