Personal loan comparison with financescout24 to the favorable loan

adminonDecember 23, 2022February 19, 2023Leave a Comment

Private loans are in demand: while a total of just under 926.7 billion euros was lent to private individuals in Germany at the end of 2001, this figure had already reached 1 by the end of 2021.429.2 billion euros . So when comparing loans and looking for one that suits you, you are in good company!

Here you can find out everything there is to know about different types of loans, requirements and costs. With the personal loan comparison of FinanceScout24 and these tips, your chances of getting favorable conditions are excellent.

The most important facts in brief

1. Not only possible at the bank
You can apply for favorable personal loans at banks as well as at platforms for peer-to-peer loans (P2P loans). Peer-to-peer? That is, that your lenders are private individuals .

2. More favorable conditions or easier access?
With a good credit rating and sufficient income, a personal loan from the bank is often more favorable for borrowers than a P2P loan. The latter, however, often makes borrowing possible even for those who are turned down by banks.

3. Save money with earmarking
An earmarked (online) loan for modernization, the car or the house is often cheaper in the personal loan comparison. Therefore, in case of need, always use a suitable type of loan such as car or modernization loan.

What is a personal loan?

A personal loan is a loan granted to a private person. Thus, the amount granted is not intended for business purposes. Rather, it can serve to cover a wide variety of private costs.

Loans of this type can be issued in several ways:

From a bank : the classic way of granting a personal loan is to take the loan from a bank. The amount of the loan is paid out by the credit institutions. However, this does not necessarily have to be one's own house bank.
From a private individual : It is also possible to take out a loan from a private individual – such as your mother or a friend. With this credit from private individuals, however, the partners move in an area not covered by consumer protection, which is why the conclusion of a contract is strongly recommended. You are welcome to use our free sample loan agreement for this purpose .
Through a P2P platform : P2P platforms are virtual places through which peer-to-peer lending can be facilitated. Either one or more private individuals act as lenders.

How a personal loan exactly, depends on many individual factors. For example, the total amount, the term and also the credit rating determine the exact conditions. This type of loan is also referred to as a consumer loan by banks . The repayment of the amount is – as usual with an installment loan – in the form of monthly payments. The monthly installment is composed of repayment and interest for the personal loan. You as a customer have a number of rights and obligations here, such as how and when the loan can be terminated.

Take out a personal loan with a bank

If the personal loan is granted by a bank, it is also called a consumer loan agreement. All agreements, such as options for unscheduled repayment or payment breaks, must be recorded in writing when the contract is concluded. Uniform form loan agreements are available for this purpose. As a borrower, you consequently receive a complete overview of your rights and obligations prior to taking out the loan.

Compared to the overdraft facility, this has the advantage that clear agreements on repayment are made. The bank is bound to the credit line and you are safe from interest rate adjustments. The interest rate that a bank offers you must also be justified in some way by the institution. For this it is necessary to specify the debit interest p.a. as a representative example. This example shows what interest rate at least ⅔ of all customers actually receive.

Private loans for freelancers and professionals often difficult?

Some banks grant loans only to employees without a fixed term or civil servants. In such cases, freelancers or tradesmen are faced with a closed door. But there are also credit institutions that are open to self-employed persons. However, when it comes to a loan for the self-employed, interest rates can differ. Often, the required minimum income is also higher.

Obtaining loans from private individuals via P2P platforms

For some years now, it has been possible for lenders to join forces and finance projects via online platforms. You as a borrower, this can give you access to a personal loan even if the credit rating is actually too low. Sometimes longer terms are also accepted and loans are granted to companies or freelancers.

You advertise your loan project to a P2P platform yourself. Here you openly give information about the purpose for which the money is needed. Whether a debt restructuring, the purchase of a new car or purchases for the garden are pending – as long as you present yourself well and the financial circumstances are right, the loan from private is a good alternative to bank loans or car loans .

Gladly seen are exact listings of the individual costs. So the lenders get a better impression of your plans. Long not all projects find sufficient lenders with P2P platforms. Success rates range from 20 to 70 percent, depending on the platform and the purpose of the loan.

Often P2P platforms incur costs for the borrower before the actual loan is concluded. For example, for "credit certificates" or other additional services such as inquiries to credit agencies that calculate the Schufa score. Such costs you add to the total loan amount, which increases the effective interest rate and the annual interest rate.

Borrow from private individuals in a direct way

Unlike a loan via a P2P platform, it is different with a loan from private individuals in the personal environment. Here, both parties act as private individuals and negotiate the conditions. Consumer protection does not apply at this point. And since it is not called for nothing " with the money the friendship stops! " , a solid contract should also be concluded for loans from private individuals without a bank. In case of doubt, you can then refer to the negotiated details if there is ever a dispute about the money.

Written form in the case of a relative's loan for capital investments

If you need the money to finance an investment (such as real estate), you should always do so in writing. Otherwise, the interest you pay would no longer be tax deductible. The tax office requires supporting documents, checks the interest rate and sometimes accepts only market conditions.

Bank loan or loan from private individuals: What suits me??

Whether a bank loan or a loan from private individuals is more favorable for you can only be answered individually. However, the following aspects will help you find favorable loans that really suit you and your circumstances.

Bank loans are often more favorable

If you earn well, have no or only low debts and no bad Schufa score, your good credit rating should lead to favorable interest rates for a loan from the bank. What are the requirements and conditions for favorable interest rates at a credit institution can differ significantly. Even a permanent employment contract or a second person as a borrower can elicit favorable offers from banks.

Worse are the chances, however, with negative entries n in the Schufa. These can be, for example, enforcement notices or cancelled loans. They are only cleared after three full calendar years, provided the debt has been paid in full. Banks check here exactly and reject often already in advance.

Also, in previous inflationary periods, service price inflation was often very persistent," writes Neuberger Berman's Brad Tank. (Image pd)

Because of stubborn services inflation and only a weak downturn, central banks are likely to maintain high policy rates for longer, writes Brad Tank, chief investment officer – fixed income at Neuberger Berman.

Prices often fluctuated particularly wildly in 2022 on days when the U.S. consumer price index was released. Year-over-year headline and core inflation were recently in line with consensus expectations. "We have had another reassuring month of steady declines. However, the structure of inflation differed somewhat from expectations. That may not have been so pleasant," says CIO Weekly.

Moderate

When the November numbers came out a month ago, investors reacted with delight. Inflation appeared to be easing across the board. "Inflation fell again in December, and food, energy and goods actually became cheaper in most cases. Service inflation, on the other hand, continued to rise. Even in previous inflationary periods, the rise in service prices was often very persistent," writes Tank at Neuberger Berman. The immediate market reaction was then as mixed as the data, they said. "Financial conditions tightened quickly, but then a sustained easing ensued. Stocks rose, yields fell, the U.S. dollar weakened, and the price of gold rose. After a few hours, investors had dismissed this as just another relatively innocuous set of numbers."

Central bank signals

The situation was made more confusing by comments from Patrick Harker, president of the Philadelphia Fed. On the one hand, it is prepared to make smaller rate hikes of only 25 basis points, but on the other hand, it wants to keep raising rates until inflation returns to its target level. Earlier in the week, central bank governors from Boston and Atlanta had already made similar comments.

"Back in November, we had noted that investors were increasingly paying more attention to economic data than to the Fed's strident rhetoric," Tank writes. Last week, the World Bank nearly halved its 2023 growth forecast, to just over 1.7%. For the developed world, it now expects growth of just 0.5% instead of 2.2%. Manufacturing purchasing managers' indexes signal shrinking industrial production in the U.S., Europe and Japan. The U.S. services PMI also just fell below 50, from 56.5 to 49.6, which also points to a recession, he said.

"Why then should we be concerned about service prices?", asks the Chief Investment Officer – Fixed Income at Neuberger Berman. "Since a sharp downturn cannot be ruled out, many investors are wondering whether central banks will have to cut interest rates again in the second half of 2023. The development of the bond markets also fits in with this," he adds.

Stubborn inflation

"On the other hand, we take the Fed and the other central banks at their word. We still believe inflation will remain stubbornly high. However, we also believe that goods inflation has passed its peak."Energy and commodity prices are not easy to forecast because they depend on many factors – the economic fallout from the war in Ukraine, the reboot of the Chinese economy and the weather," he said. In the services sector, Neuberger Berman expects housing costs to gradually decline despite the December increase, he said.

Otherwise, however, service inflation is likely to remain high because wages are rising and staffing shortages still prevail. Most recently, U.S. jobless claims fell to a three-month low, below expectations. At 3.5%, the U.S. unemployment rate is near a 50-year low, and the euro area unemployment rate is also at a record low of 6.5%.

Increasingly, there is a case for much higher wage settlements in Japan, Europe and the U.S. As recently as January, striking New York nurses won wage increases of no less than 19%. "Workers want to participate more in economic growth. We think this is a long-term and global development. We can well imagine that service inflation will remain stubbornly high in 2023 and that the economy will slow only slightly. Central banks could then hold on to high interest rates for even longer", concludes.

Asset managers expect inflation in the U.S. and euro area to fall to between 3.0% and 3.5% by the end of 2023. This would be much lower than recently, but still above the target value. "The maximum in key and short-term interest rates would then be permanent. We are more optimistic about interest rate volatility, which could be much lower than last year. For the first time in a long time, we think yields are reasonable again in view of the duration risk. We think they provide a sufficient buffer again. The last few years have shown us that the economy and the world situation can always surprise us. Nevertheless, we believe 2023 holds more opportunities and significantly less risks for bond investors than 2022.

Invesco experts see no recession in their investment outlook for the second half of 2022. (Image: Shutterstock.com/Zhangchaoran)

While the volatile mix of geopolitical risks, high inflation rates and diverging monetary policies continue to keep markets on edge, Invesco's economists and investment strategists forecast further price increases and weaker global growth, but no recession, in their investment outlook for the second half of 2022.

In their baseline scenario, Invesco experts assume that the military conflict between Russia and Ukraine will continue without escalation that could lead to an abrupt disruption of Russian energy supplies to Europe. Inflation will peak in mid-2022 and then slowly ease in the U.S. and other major industrialized countries as falling real incomes and monetary tightening put pressure on demand. Due to high commodity prices, they expect growth to remain weak for the rest of the year, followed by a return to trend growth in 2023.

Avoid recession

As Henning Stein, Global Head of Thought Leadership& Market Strategy, explains, the extent of the downturn will also depend on central banks' ability to tighten monetary policy enough to cool the economy and lower inflation, but not so much that their respective economies slide into recession.

With an uninterrupted supply of energy, but energy prices remaining high, the Invesco experts expect high inflation and weaker growth in Europe over the rest of 2022 and into 2023 – a difficult combination that could lead to the European Central Bank (ECB) raising interest rates only once or twice in 2022.

Positive stimulus in the USA

In the U.S., continued positive stimulus from the end of pandemic-related restrictions should support growth momentum, although the Federal Reserve (Fed) aims to reach a neutral policy rate and shrink its balance sheet as soon as possible in 2022. From the Fed, Invesco experts expect a tightening of monetary policy in line with market expectations, which should keep the key interest rate in a range of 2.50 to 3.00 in the first quarter of 2023. This would leave the Fed's monetary policy stance neutral to slightly restrictive. As a result, the overall yield curve would flatten by the end of the year.

Compared with the major Western industrialized countries, China remains in a distinctly different phase of the economic cycle – mainly due to the ongoing pandemic-related challenges. However, the Invesco experts expect growth to accelerate over the rest of the year, boosted by monetary and fiscal policy stimulus, followed by a return to potential growth.

Further rate hikes are forecast for some emerging markets, such as Russia, Brazil and Mexico, where higher inflation has already led to aggressive rate hikes in the past year. In contrast, large emerging Asian economies, where inflation is not elevated, may be able to continue to keep interest rate tightening limited this year and thus maintain reasonable levels of economic growth.

Two Alternative Scenarios

In their investment outlook, Invesco's investment experts also outline two alternative scenarios that are considered less likely to occur. In the negative scenario, an energy shock would result from a cessation of Russian energy supplies, leading to higher global inflation and weaker growth, and would be associated with higher recession risk.

In a positive scenario, a surprise de-escalation of the military conflict in Ukraine would reduce current geopolitical risk premiums in energy and commodity markets. According to the Invesco experts, this would argue for higher global growth and declining inflation worldwide, but also for a stronger tightening of monetary policy in most of the major industrialized countries.

Modest yields

In terms of the market environment, Invesco experts expect market volatility to be higher on average later in 2022 than in 2021, as long as markets digest the tighter monetary environment. In their baseline scenario, they forecast modest returns with little spread in returns between bonds, credit assets and equities.

In this environment, they believe there is a strong case for overweighting equities versus bonds. With growth momentum slowing and inflation nearing its peak, they would expect defensive sectors with quality characteristics such as IT, communications services, healthcare, real estate and consumer staples, as well as large caps, to outperform moderately. In regional terms, they would have a preference for U.S. stocks over stocks in other developed countries, as the global growth slowdown argues for a focus on regions with lower cyclical sensitivity and better cost structures.

For investors, it is important to remain calm even if the markets sell off, says Henning Stein: "Investors should continue to act strategically and avoid tactical actionism. In China, the opportunities are greater than the risks. I see good opportunities for entry."

In the search for yield in the bond sector, Invesco experts are focusing on longer duration rather than higher credit risk. As the cycle progresses, credit spreads are expected to widen, especially in lower-rated segments, they say. They consider credit assets from emerging markets to be attractively valued at present.

Outlook for non-cash assets favorable overall

In Alternatives, buyout and venture strategies may be under pressure from relatively high valuations and increasing "dry powder" (capital committed by investors but not yet invested). With the potential for a sustained upswing in global trade, passenger traffic and office occupancy combined with relatively attractive valuations and inflation protection, Invesco experts believe the outlook for real assets is favorable overall. These would normally respond positively to inflation, because higher prices normally lead to higher revenues and appreciation of physical assets.

"In our baseline scenario, higher-than-average inflation and several interest rate hikes argue for building a portfolio that can generate positive nominal returns even in a difficult and unfamiliar environment," says Stein. "According to our forward-looking risk model, a traditional 60/40 portfolio can outperform by adding inflation-sensitive assets such as real estate and commodities under different macro and market conditions."