The 5 most important points in the credit agreement, Part 2
There is nothing wrong with taking out a loan. But before the borrower signs, he should take a close look at the loan agreement.
There can be many different reasons that cause the borrower to take out a loan. And, first of all, there is nothing wrong with that. However, the borrower should always keep in mind that he makes a commitment through the loan. After all, he can not credit the loan as a well-intentioned cash injection. Rather, he borrows money from the bank, which he also has to pay back with interest.
It is therefore important, on the one hand, that the borrower does not let himself be impressed by advertising promises, but takes the time to obtain and compare several loan offers. On the other hand, the borrower should read the loan agreement carefully.
Because with his signature, he agrees to the agreements and is bound to it. Only: what is the point of a loan agreement? And what should the borrower pay particular attention to? In a two-part overview we mention the five most important points in the credit agreement. The first part dealt with the question of whether the loan fits into the budget at all, and the key details in the credit agreement.
Here is the 2nd part.
The interest rates are presented transparently, the interest rate is in order and the monthly loan installments are easy to handle: At first glance, a loan offer often sounds like a fair solution. But the devil likes to be in the detail. For example, a loan agreement often contains collateral agreements, which for example provide that the borrower can make special repayments, adjust the amount of credit installments or suspend installment payments. In principle, there is nothing wrong with such agreements.
After all, it is quite possible that the borrower may be left with some money and want to use that money to pay off the loan more quickly. Or that, conversely, it becomes financially tight and the borrower wants to get some air by paying lower installments or by pausing to repay the loan for two or three months.
If his loan agreement provides for such opportunities, flexibility is undoubtedly a clear advantage. But: The borrower should look very closely, if and if so, what costs associated with the side agreements. Because banks and savings banks can be such good extras pay well sometimes.
Another important point is additional products. And in this context, the residual debt insurance is a true classic. The residual debt insurance is a term life insurance, which intervenes if the borrower can not repay his loan properly. Typical situations that are covered by a residual debt insurance are, in addition to the death of the borrower, a serious accident, illness-related incapacity and job loss.
The promises are good, and if something really bad happens, at least the borrower does not have to worry about repaying the loan. However, practice shows time and again that the residual debt insurance just then, if the borrower would need, just not paid, because just this case excluded or a small condition is not met.
In addition, the residual debt insurance that banks and savings banks offer along with the loan is often too expensive. And there is another disadvantage: the residual debt insurance is calculated as a premium for the entire repayment term and is included in the cost of the loan. As a result, the borrower pays not only the insurance premium, but also interest.
The borrower should therefore think twice about whether he really needs the residual debt insurance. With a manageable loan amount and a not too long credit period, a residual debt insurance is usually superfluous. If the borrower wants to hedge, he should better carry out an insurance comparison and take out a life insurance with an independent provider.
Here a term life insurance often costs only a few euros a month. And even if banks like to portray it differently, the borrower is not obliged to take out residual debt insurance. As a general rule, the borrower should not allow any further financial products to bounce. He does not want to take credit – and it should stay that way.
The borrower should only sign the loan agreement if and only if the documentation is completed. It is not a good idea to give the lender the opportunity to add missing data later. Because by his signature, the borrower confirms that all information in the contract is correct and he agrees with all agreements.
The borrower thus has to stand up and take responsibility for what he has signed. For this reason, the borrower must of course not give false information, gloss over nothing and conceal no obligations.
And: The borrower does not have to sign the loan agreement right away. He should under no circumstances put pressure and get a signature urged. Loans are not financial products that are available for a limited time or in limited quantities.
A reputable lender will provide the borrower with a copy of the contract documents so the borrower can read and review the contract. And this time, the borrower should necessarily take.
If the borrower thinks otherwise, he may revoke the loan agreement within 14 days. This right of withdrawal is enshrined in the Civil Code and the lender is obliged to properly inform the borrower of his right of withdrawal.
If the borrower decides to resign, he does not have to justify his revocation. It is sufficient if he informs the lender in a short letter that he revokes the loan agreement. The borrower can hand in the letter personally to the bank, send it by post or send it by fax or e-mail.
In case of doubt, however, the borrower must provide proof that he has revoked the loan agreement on time. Therefore, for safety’s sake, the borrower should opt for a shipping method that he can prove if necessary.
If the loan has already been paid out, the borrower must repay the money within 30 days of the declaration of withdrawal. For the time elapsed between the cancellation and the repayment, the lender may charge the interest that was contractually agreed. Therefore, the borrower should initiate repayment as soon as possible. If the borrower fails to return the loan amount within 30 days of the revocation, his revocation remains effective.
The borrower automatically gets into default. Therefore, the lender may demand, in addition to the interest for the period, a delay damage to the entire loan amount.
In connection with the right of withdrawal there are two exceptions:
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