Be careful when taking out an installment loan

The consumer advice center warns of dubious offers – and possible hidden costs. Anyone who signs a contract should observe a few basic rules.

Money for the used car: consumer credit is used particularly often when buying a car.

“Loan, uncomplicated, immediately, even if your bank has already declined”: With these and similar slogans, all possible providers of installment loans are currently wooing customers. They apparently speculate that in Corona times, many bank customers have already overdrawn their checking accounts and would like to use a loan for new purchases. It is particularly often cars, consumer electronics, kitchens or furniture for which consumers in Germany would want such additional loans. The interest rates for installment loans are already rising because many providers promise a profitable business and are probably also pricing in defaults.

Reason enough for consumer advice centers to warn of the pitfalls of installment loans. One does not want to demonize this type of loan, but point out possible pitfalls, said Annabel Oelmann, member of the board of the Bremen consumer organization, in an interview with the FAZ. There are often hidden costs with installment loans. In particular, bait offers, in which it is promised that there is a completely uncomplicated, cheap loan, even if the house bank has already declined, should be treated with caution. “If something like this is sent to you by direct mail or you come across something like this on social media, you should be careful,” says Oelmann. Often there is only a credit broker behind it, who will then take 50 or 100 euros from you before you even get a loan. And these loans then often turned out to be more expensive than it had previously appeared.