Loan interest – an important factor when taking out a loan

Are you planning to build a house, buy a car or make another larger investment soon? Then you may want to take out a loan because you do not currently have enough cash. You will find loan providers most easily on the internet, where you can also calculate the costs including loan interest, which is often forgotten. A good example for Germany is Mutuo Gruppe.de in Berlin.

Loans via an online provider are often cheaper because no large branch network, as banks have, is needed to do business. Loan interest also depends on the amount of a loan and its term. With a large loan it should not be forgotten that at first only the interest is paid and the actual debt is reduced only after months. Remember, therefore, that the amount made available is not the amount you ultimately have to repay. Loan interest must be added. Check different offers and compare the final sum including interest.

In the tax return as well, where your loan can be deducted, it is not the requested loan amount that counts but the total loan amount including interest. The interest rate on a loan is influenced by key interest rates. These are the rates that the institution providing the loans has to pay for the money it borrows from the central bank. The key interest rate usually depends on the economy and fell sharply in 2012. Depending on the economic situation it can fall further, which would also make loan interest cheaper. The economic situation can, however, also deteriorate and key rates can rise, which would then affect loan interest as well. When taking out a loan it is therefore also important to look at the economic situation and consider the forecast.

Here once again are the points to consider when taking out a loan:

• Watch the economic situation to see how key interest rates are moving

• Compare loan providers, preferably online. E.g. via our free loan-comparison service

• Calculate the total amount of the loan including all costs and loan interest

• Do not forget to deduct the total amount of the loan in your tax return

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