## Interest rate – credit comparison.

For the temporary provision of capital, the creditor pays the debtor a sum of money – the interest. The amount of this sum is based on the agreement between the two contracting parties and depends on the amount of the loan. The interest rate determines the percentage of the loan amount and thus determines the amount of interest that is payable in return for the principal.

## How do interest rates differ?

As a rule, the interest rate refers to one year. However, there are also interest rate variants that calculate a monthly interest amount or the rate for a quarter. In Germany, an interest calculation method is used that calculates 30 days every month and accordingly a year with 360 days. In general, a distinction is made between the following types of interest rates:

1. The nominal interest rate is the pure interest rate that enables the interest amount to be calculated.
2. The real interest rate, on the other hand, is the interest rate adjusted for the effects of inflation.
3. The effective interest rate also includes all relevant variables that can influence the amount of the interest. These include the payment rate or additional costs.

## What is the compound interest?

In the case of an interest-bearing investment, the point in time when the interest is paid out is decisive, since the total amount of interest changes and the amount of the following interest amounts also increases accordingly. This effect, known as compound interest, results in an advantage for the creditor the more often the interest is paid out.

## Fixed and variable interest rate

It is also important to distinguish between a fixed interest rate and a variable interest rate.

A fixed interest rate is set in the contract at the start of a money transaction and does not change in value until the end of the contract. In the case of a contract with a variable interest rate, on the other hand, this is changed within the term of the contract, whereby this change is based on the real developments on the capital market and depends on the key interest rate.

## Credit to tradesmen, where to obtain?

Credit to Tradesmen is a subject that credit often needs in our trades as everyone. Our tradesmen, who are in need of constant cash conversion, are behind the banks and the state in terms of credit and can get the most suitable loan with special interest rates.

## How Is Trades Credit Calculated?

When the owners apply to the banks for the tradesmen loan, they can receive attractive offers within the scope of the relevant regulations, such as personal requirement loans, without a certain amount and maturity limit. However, depending on the campaigns of the banks and the financial situation of your business, there may be a change in the amount of loan desired.

## Is Guarantor Required When Taking A Tradesman Loan?

Banks do not require guarantors in general for loans used for commercial use, but there may be a change from bank to bank depending on the amount of the loan.

Most of the banks offer very attractive campaigns with special terms and percentages for% tradesmen and SMEs. Some banks may request certain documents during the application of tradesmen loan . But not every bank wants these documents.

• Commercial register newspaper
• Copy of the identity card of the partners, if there are partners.
• Balance sheet and income statement for at least the last two years
• Inventory of assets belonging to partners and company, if any
• Signature Circulars
• Documents such as the current tax plate may or may not be requested depending on the working status of the banks.

## Why Do We Need Tradesmen Loan?

Our tradesmen sometimes need credit by having cash shortage when their expenses are more than their income, and sometimes they need credit to serve in larger branches in order to grow their businesses. First of all, let’s not forget that we need to apply as a business, not as an individual, so that we can apply for tradesmen loans.

When buying tradesmen loans, let’s not forget that banks evaluate the financial situation of the company, as well as the status of the owner and partners. Let’s not forget that our enterprise’s corporate rating must be good and that our individual rating must be good in order to receive the loan.

The interest rates vary from bank to bank as the tradesmen loans have a long maturity and a higher credit limit. It is useful to make a decision after making a loan comparison with the most suitable loan for your budget and purpose. Let us make this comparison for you, you just put your work on your credit.

### I applied for tradesmen loan, I was refused, what should I do?

When applying for tradesmen loans, your credit registry is of great importance, just like normal loans. If your credit was rejected because your credit score is low, we should first investigate it and find out why our score is low.

Why Credit Rating Is Low;

• Due to regular and timely unpaid bills and credit cards
• Making multiple loan applications negatively affects your credit registry
• You have a high limit card and your credit score will be low if this card is in debt.

It should not be forgotten that the banks do not want to give you money without being sure that they will get it back and without guaranteeing themselves.

## Credit for debt – Apply now!

What has been happening at federal level for a long time and somehow works, looks no different for individual private individuals. Again, there are many debtors who have accumulated a large or less large mountain of debt. But unlike the state, as a private individual you have to pay your debts so as not to slip into bankruptcy and thus lose everything. Those who can therefore take out a loan for debt in order to avoid over-indebtedness and the associated consequences.

## When do you start talking about debt?

In principle, any unpaid invoice, even if it is not yet due, is a debt to another person or company. Because everything that you as a consumer do not pay in cash and therefore buy on “pump”, you finance and bring yourself in financial default. In the case of purchase on account, this liability is approved by the creditor by the specified payment date. If you overstep this date, the debt becomes debt, which can quickly become a major problem.

Because a few unpaid bills and an overdrawn account are enough to count as over-indebted and no longer solvent. A situation in which millions of people are in Germany and which is neither good nor desirable. Because if you have debts, you can no longer participate in normal life and often do not have the opportunity to spontaneously make important financial decisions.

Therefore, you should always act immediately if you can see that your own liquidity can be at risk from debt. At best, with the help of a loan to settle the debt.

## When is a loan worth debt?

You should only take out a loan for debt if you can afford it and if it can really be used to summarize all debts. In the end, there can theoretically only be one creditor who has to be served. Namely the bank that provided the loan. Only if this succeeds can the debt be successfully paid off and banished from life.

Furthermore, a loan for debt is only worthwhile if it is accompanied by a low effective interest rate. If an expensive personal loan has to be taken out, one can perhaps reduce the number of creditors. But if the interest rate and the monthly installments remain the same, no financial relief has been achieved and borrowing is only worth it to a limited extent.

## What needs to be considered when recording it?

The goal should always be to summarize all debts, no matter how they appear, in a loan amount. Since this can result in a quite individual loan amount, the installment loan is most suitable as a loan for the debt. It can be best adapted to the borrower in terms of loan amount and repayment and is therefore the easiest to fit into their financial processes.

Since the lowest possible interest rate should be aimed for, it is important that different offers are compared with each other before borrowing. Care should also be taken to ensure that the loan is not applied for too late to repay the debt. If the debt has already manifested itself in the private credit checker and if it is deposited there as a negative entry, it will be very difficult to find a good loan offer. Because the banks and savings banks in Germany involve private credit checker in their decision regarding lending. And only if this is of a positive nature will there be a good loan offer.