The installment loan without processing fees is occasionally offered in advertising. However, this does not mean a statement about the actual financing costs. The processing fees always apply at the beginning of the loan and must be shown in the annual percentage rate. The longer the term of the loan, the more processing fees are put into perspective. A real benchmark for the cost of credit is always the APR and not the costs it contains.
Who offers the installment loan without processing fees.
The installment loan without processing fees is often used as an advertising argument. Manufacturers’ banks in the automotive industry in particular use the installment loan to boost sales. In times of weak sales, with new sales, you can even get completely free financing. Usually it is the manufacturers of not so popular car brands that make their vehicles “tasty” to consumers.
However, the auto industry is not the only provider that uses its customers’ savings interests as a marketing tool. Other providers who make their products affordable through installment loans also use the installment loan in their advertising without processing fees. This strategy has been very popular with department stores and mail order companies for years. Customers overlook the fact that the elimination of processing fees alone does not say anything about the actual financing costs.
Nevertheless, these loan offers can often be particularly cheap. The mixed calculation, which not only makes money on the credit, but above all on the goods makes this possible.
Compare installment loans.
The comparison of installment loans is not as easy as it appears at first glance. This is due to the creditworthiness of many loans. Not every applicant automatically receives the same APR. If the credit rating is rated as particularly good, extremely low interest rates are possible.
However, if it is rated as worse, these loans can also come close to the overdraft interest. A personal offer is necessary to make the offers actually comparable. A personal loan offer is therefore much more important when comparing credit than the advertising message alone to give an installment loan without processing fees.
The influence of the term on the processing fee.
The term of an installment loan has an impact on the importance of the processing fees in the case of the annual percentage rate. The reason for this is that it only arises once in the beginning in one sum. However, the fee is calculated in the effective annual interest rate, spread over the entire term. An installment loan without processing fees is therefore much more interesting with shorter terms than with long ones.
Other fees that are not apparent from the APR can initially make the loan more expensive without being noticed. Insurance premiums, for credit default insurance, are a good example of this. Such hidden fees should pay attention rather than the installment loan with no processing fees.