Excursus: Credits and the Consumer Credit Directive

It is not easy to compare the numerous offers and to find the cheapest loan. In any case, it is important and useful to know the characteristics of the personal loan and also to inform about innovations, for example, about requirements of the consumer credit law and the statement that payable processing fees are not lawful. With private text loans this is important now.

What is a loan?

text loans

Loans are nowadays a natural means of financing. Previously, when loans were used almost exclusively for the acquisition or construction of a property or for a business start-up, consumer goods such as electrical appliances and cars are now being financed as a matter of course. In recent years, a steadily increasing acceptance of credit liabilities among the population has developed.

Rate of interest

The interest rate level for loans is based primarily on the key interest rate of the Central Bank. This has been at a historic low of 0.50% since the economic and financial crisis. On the one hand, this means significantly lower interest rates on loans and, on the other, lower credit interest rates on deposits such as overnight money and time deposits. This is clearly the case when comparing the daily interest rates of 10 years ago and today. At that time, interest rates of up to 5.00% on monthly interest coupons were possible, while the first-placed in daily money settlement offers today only 1.65% interest.

Even if loans are cheap at the moment:

A detailed comparison of the providers is absolutely necessary. Banks are sometimes tempting with offers that in practice are only available to a very small proportion of high creditors. Banks need to hedge a potential loan default and offer different terms to customers with poor or very good credit ratings, as the likelihood of default varies by client.

The Internet offers a number of free and up-to-date comparison portals, which are ideal for a credit comparison. Online site also offers a detailed credit comparison under the preceding link. In order to make the game of interest rates much easier and clearer, the Consumer Credit Directive has been in force for some time. This prescribes an extensive information obligation for consumer credits up to 75,000 dollars.

First and foremost, the bank must specify the maximum effective interest rate which at least 67% of all applicants can receive. This is to achieve a healthy average that is representative of most consumers. In advance, banks have always been intent on specifying a maximum unreasonable low interest rate as the maximum interest rate that is only available to a very small proportion of very high creditworthiness applicants. Furthermore, the bank must inform in advance about all costs that may arise when applying for, use and repayment of the loan. These rules mean a high level of transparency for the consumer and a simpler credit decision.


Professionals recommend applying for a consumer credit at a so-called direct bank. Due to the low cost structure, direct banks do not have to maintain branches due to the high rental and personnel costs, direct banks can offer consumers significantly better interest rates on loans. The application, account management and the contact take place exclusively over the Internet and telephone. Although personal contact is still important to many people, it becomes an increasingly unimportant criterion due to the potential for savings.