The German Trade Association (HDE) expects sales of 94.5 billion euros for the Christmas business in 2017: On average, every German citizen over twelve years wants to spend around 466 euros on Christmas presents. Around the festival and the subsequent New Year’s Eve party, additional expenses are added. These include restaurant and concert visits, food shopping and travel. 11.7 million Germans (17%) finance these expenditures via a credit line with an average interest rate of 8 percent. Another 11 million (16%) do not rule out the use of the MRP. This is shown by a November YouGov survey commissioned by the credit portal Smava. In total, 22.7 million Germans risk getting into expensive long-term debt through the use of their emergency credit.
Debt loan is expensive and risky
Only just under a third of respondents (29%) who believe that they will use their credit line will repay the borrowed money within one month. The majority (87%) assume that they will borrow the money for up to one year. However, 68 percent of the creditors do not know that, according to the Deutsche Bundesbank, interest rates of 8 percent on average will fall due. Due to the lack of regular eradication, the use of MRP is risky, especially with prolonged use. Consumers easily get into expensive long-term debt.
Installment and framework loans are cheaper and safer than out-of-pocket loans
“It is obvious that consumer finance is part of everyday life for many Germans. The absolute majority pay back the loans easily, “says Alexander Artopé, CEO of smava. “It is critical that so many Germans pay too much for the financing. And this despite the fact that installment and credit loans offer cheaper and safer alternatives to disposition. “Credit lines are recommended for those who want to use a cheaper alternative to dispo and repay the money within a few months. The best rates are usually installment loans- moved here. They are particularly suitable for those who want to repay the borrowed money for a year or more on the basis of a regular repayment.
Online loans are the cheapest
Despite low interest rates, there are relevant price differences, especially for installment loans. In October 2017, for example, the Germans paid an APR of 5.65 percent on average for an installment loan. Those who completed their loan on the Internet paid just under 2 percentage points less (3.77%). For comparison: the credit on the loan averaged 8.48 percent. This is shown by data from the German Bundesbank and the credit portal smava. “If you only go to your local bank, you will probably pay too much. The cheapest loan can only be found with a cross-bank credit comparison. Credit portals such as smava make this possible. At the same time, 25 banks and 70 loans can be compared. And without going from branch to branch and having to reveal each time to a stranger, “says Artopé.