The annuity loan is a loan that is most frequently requested in Germany. The name derives from the fact that the rates are called annuities. For this particular loan, the installment payable consists of an interest and a repayment installment. Especially the annuity loan, because here the monthly payable rate always has the same amount. The interest rate on the annuity loan is fixed for the life of the loan. Another special feature is that the so-called initial repayment steadily increases despite the constant monthly rates. The increasing repayment results in this case, because the remaining debt continues to fall, the further the maturity has progressed. The lower residual debt then bears interest at a constant percentage, so that the portion of the repayment increases successively.
Advantages of annuity loan for the borrower
Through this special calculation of the interest, the borrower can enjoy various advantages. Above all, he can make better planning by the constant monthly load. In addition, he can not lose track of his payment obligations. He can plan his monthly repayment burden on an annuity loan over a long period of time because it is always the same. The borrower always has a size to consider in an annuity loan and can adjust other loans according to their financial capabilities.
Always compare offers for an annuity loan
As mentioned, the annuity loan is a very popular and widely used form of financing. This brings with it the fact that the financial market also holds many different offers. Consumers should always compare the terms of various annuity loans to find an acceptable offer. Consumers should, for example, know that in addition to the annuity loan, there is also the so-called repayment installment loan, which also provides consistent installments. In-depth advice from a specialist should not be missing in any case. Especially if one binds itself by the annuity loan eg as real estate financing over many years to payment obligations.