Month: February 2019

Prepayment Penalty: Information on the Annuity Loan

by Sharon Manning

The annuity loan is a loan from a bank at a constant rate. The amount of the payable rate therefore remains the same over the entire term. The annuity rate or annuity consists of a repayment and interest portion. At any rate, part of the remainder of the debt is paid. This reduces the interest component in favor of the redemption portion. The interest is set in the annuity loan at closing for a contracted period.

In a nutshell: information on the annuity loan for fast readers

  • An annuity loan is a loan form with fixed monthly installments consisting of interest and principal.
  • At the beginning, the annuity consists primarily of interest payments and only a small part of capital repayments. In the course of the fixed interest period, this ratio shifts.
  • The interest rate is fixed once at the beginning and is thereafter not negotiable.

Annuity Loan as Formula: Calculate Annuity

Annuity Loan as Formula: Calculate Annuity

An annuity loan is especially intended for mortgage lending. Talk to your bank.

An annuity loan can be calculated. An annuity loan is made up of several components: the annuity, the term and the repayment installments. In order to calculate these three formulas are used, which we explain below.

To calculate the annuity, ie the monthly rate, the following formula is used:

The annuity formula in words:

Annuity = loan amount x (1 + interest rate) Term x interest rate
(1 + term) runtime -1


Alternatively: annuity = amortization portion + interest portion

For the further formula we need the following components:

R = annuity S O = loan amount
i = interest rate n = duration in years
T t = repayment installments q = interest factor


Now we use this annuity calculator for an example. The interest rate in this example is 3%. The interest factor (q) is then 1.03. This is based on the following calculation:

q = 1 + p

This must now be used in the following formula:

Annuity = starting sum x 1.03 5 x 0.03
1.03 5 -1

Calculation of the term

Calculation of the term

The term of the annuity loan can also be calculated using a formula:

n = - ln (1 - ix S 0 / R)
ln (q)

ln stands for the logarithm Naturalis. However, this formula assumes that the interest rate remains the same throughout the term.

Annuity Loan and Amortization Schedule

Annuity Loan and Amortization Schedule

An amortization calculator for the annuity loan is also available through the formula:

T t = T 1 xq t-1

T t means the first repayment rate. t is the number of periods.

The annuity loan: advantages and disadvantages

The annuity loan: advantages and disadvantages

The annuity loan has the following advantages and disadvantages compared to other loan types.

  • Fixed interest ensures planning security

A fixed interest rate annuity loan is usually between five and 15 years. Within this fixed rate, the monthly rate is always the same. This is easy to calculate, offers planning security and you always know how many euros have to be transferred to the bank.

  • Remaining debt at the end of the fixed interest period is fixed

Even if you do not plan to pay back the remaining debt completely by the end of the contract, for example because you want to carry out follow-on financing or rescheduling, you can calculate this with the formula at the beginning:

S t = S 0 x q n - q t
q n - 1


  • Redemption reduces the residual debt

Since the principal payments are usually settled immediately, this ensures an immediate reduction of the debt. Also the interest payments decrease so continuously.

Talk to the bank about the amount of principal and interest. With our formula you can then calculate the annuity.

In contrast, there are the following disadvantages:

  • No contract changes during the term possible

As a rule, no changes to the contract are possible during the fixed interest period. So if you want to stay flexible, should make special repayments. Even a negotiation of the interest rate, for example, because the interest rate decreases, is usually not possible.

  • Interest rate risk after expiry of the fixed interest rate

For the follow- up financing there is a risk in terms of interest. It is not foreseeable what the interest rate level looks like after the end of the fixed interest period. However, if you want to secure the low level of interest rates, you have the option of taking out a forward loan. But the interest rate commitment must expire in one to five years.

  • Redemption of the loan amount at the beginning of low

In the beginning, the repayment of the loan proceeds only slowly, because first a very high part of interest is paid.

When does an annuity loan make sense and what are the options?

When does an annuity loan make sense and what are the options?

The annuity loan is useful if you are planning a home loan and therefore it is about larger sums and long maturities. In addition, the interest rate risk associated with this type of loan is relatively low. The course of the fixed interest period can also be precisely planned to the euro.

In addition to your annuity loan, you can negotiate options with your bank.
So there is the possibility to arrange special repayments. Then you can make unscheduled payments interest-free. With this method, you reduce the residual debt faster.

Arrange for as long as possible a non-provisioning time, because often the banks calculate supply interest. These will only be incurred six or twelve months after the loan is granted. If, for example, your construction project is delayed, provisioning interest can lead to extreme unplanned additional costs.

Foreign Loan for the Self-employed

by Sharon Manning

Foreign loans are still used in German as a loan, which can be sought especially if the German banks were rejected because of a bad Private Credit. Nevertheless, foreign loans are by no means awarded "just like that", but are sometimes subject to even tighter examinations than would be the case with a German lender.

The foreign credit for self-employed is effectively hard to obtain, because even with a Swiss loan, self-employed people do not meet all the requirements that are imposed on their borrowers. In addition to the foundation, namely that there is no disclosure, these also include a certain minimum and maximum age of the borrower. Currently, even if they can differentiate among the banks, these are a minimum age of 18 and a maximum age of 55 or 58 years (depending on place of residence).

In addition, a regulated income must be presented in a certain, fixed amount, which has been accordingly received in the last 12 months. This clause, on the other hand, ensures that foreign credit for the self-employed is hardly an alternative.

On the one hand, income usually fluctuates depending on the order situation or the turnover achieved; on the other hand, the income from self-employment is not as secure as with a person in permanent employment. The consequence is that self-employed in foreign loans have little chance to get it, even if the irregular income is above the German average of a classic employee.

The Private Credit as a stumbling block

The Private Credit as a stumbling block

The self-employed are generally not welcome borrowers because of their uncertain financial situation. In Germany, however, rejection tends to be mostly based on the negative entry in Private Credit, so the opportunities for borrowers working on a freelance basis are often even higher when looking for a German lender who refrains from asking Private Credit.

Because of the unsecured and irregular income, there is hardly any creditworthiness abroad worth mentioning, which is why foreign credit for the self-employed almost always results in a rejection, unless the bank has specifically targeted these cases. Since the application for foreign loans can be made directly online, the credit is certainly worth the try, but should not necessarily be expected with a positive feedback.

However, when a loan is urgently needed, the self-employed usually have to look around on a private basis. Either through private loan portals, which mediate private lenders with private borrowers, or just in the circle of friends and family. German banks can also provide one or more additional security (s), such as a guarantee or vehicle registration form for their own car that has already been paid for. The loan is so complicated, but not impossible.

Loan Without Proof of Income

by Sharon Manning

Borrowers can look forward to numerous loan offers in the market today. Many banks and savings banks today offer borrowers the same multiple loan offers with attractive terms. In particular, the online banks on the Internet can convince with flexible credit products that allow the borrower a comfortable repayment.

Not infrequently, the term, loan amount and the use of the borrower can be determined individually. Accordingly, the borrower is given the opportunity to adjust the repayment to individual requirements. In addition to low interest rates, the offers of online banks also offer the possibility of simple application.

Borrowers can now apply for a loan without proof of income. However, the high variety of offers also brings with it a disadvantage, the comparability decreases. Borrowers who want to win the individually best offer on a permanent basis, can not avoid a comparison on the Internet. Numerous finance portals are now available for comparison.

Credit without proof of income desired - This should be considered in the comparison

Credit without proof of income desired - This should be considered in the comparison

When comparing multiple loan offers, borrowers should focus primarily on the effective interest rate, especially those who want to save money permanently, should consider the effective interest rate as a primary comparison criterion. The effective interest rate depends on various factors. In addition to the credit rating, the loan amount and maturity in particular have a decisive influence on the effective interest rate. Last but not least, the form of the repayment is crucial.

The creditworthiness of the borrower today is mainly tied to the private credit and the income of the borrower. Borrowers can not only define the repayment over the term and loan amount, but the term and the loan amount also define the risk for the bank. Those who opt for a long term and a high loan amount, must expect much higher interest rates than a borrower who seeks a quick repayment.

The application for a loan without proof of income can be made today via the Internet. The application proves to be as easy as possible. In advance, it is always necessary to fill out an application form in which you must provide details of the income, the person and the requested loan, where the details of the borrower are used and no additional proof of income is required.

If the subsequent credit check is positive, then the loan approval is already issued, so that directly the loan agreement can be downloaded, printed and signed. The credit agreement has to be sent to the bank by post. Upon receipt of the contract, payment of the full loan amount will be made.

Find the least expensive loan without proof of income by comparing it on the internet

Find the least expensive loan without proof of income by comparing it on the internet

The comparison of loans without proof of income is today possible with the help of credit calculators on the Internet. With the loan calculator individual sizes can be included in the comparison and therefore the best individual offer can be found.