Who has no upfront commercial loans
Credit comparison: you should pay attention to these 5 tips!
Table of Contents
Financing a business start-up is a major challenge. Most start-ups do not have enough capital to finance their startups themselves. For many entrepreneurs, a bank loan is the first choice.
However, there are sometimes major differences between commercial loans. Therefore, you should never choose the first bank that you come across, but rather minimize the costs by comparing loans. Here you can find out what to look out for.
1. Choose the right term
If you plan to take out a loan, it is definitely advisable to first draw up a detailed budget. Put your monthly income and expenses in relation.
After deducting all expenses, you should still have enough money left that you can easily repay the monthly payments. A monthly rate that is too high can be expensive, as penalties are due in the event of failure to pay. Too low a rate is also expensive because it extends the term and you pay more interest.
2. Specify the purpose of the loan
Most banks offer different types of credit. There are e.g. car loans for the purchase of a new car or special loans for the renovation of your own house. Borrowers usually get more favorable terms if they use the money for a specific purpose.
The reason: the car or property can be deposited with the bank as security. Many online portals for loan comparison therefore ask for a purpose. The borrower does not have to provide any information here, but it is recommended because it saves a lot of money.
3. Use only reputable providers
If a provider charges upfront fees before signing a contract, you should be careful. You can often recognize dubious providers by the fact that they have overpriced hotlines and offer paid consultation appointments.
If a loan is linked to other products (e.g. building society insurance) and if all fees are not transparently disclosed at the beginning, you should better keep your hands off them. Particular caution is required with “loans without Schufa”. It is very likely that this is a dubious offer.
4. Avoid residual debt insurance
Many banks offer residual debt insurance when taking out a loan. This should step in when the borrower can no longer pay.
For example, in the event of occupational disability or death. We advise against taking out such an insurance because the residual debt insurance makes the loan very expensive.
5. Pay attention to free special repayments
Many borrowers want to pay off their loan as quickly as possible. Especially startups that are getting off to a good start would like to use their first income to become debt-free again. At every bank you have the right to special repayments, i.e. you can also repay the loan early.
The only question is whether costs will then be incurred since the lender is entitled to compensation in this case. Some banks charge early repayment penalties, but others waive such a fee and allow free special repayments. So you should pay attention to the agreement of free special repayments in the loan agreement.
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