The key word here is credit-related interest. This is interest that is always granted depending on the credit rating. The bank began making the installment loan dependent on creditworthiness at the time. For borrowers with good and very good creditworthiness, interest rates depend on the creditworthiness because the risk is not shifted from the banks to the borrowers who are very likely to meet their payment obligations.
The situation is very different when borrowers with poor creditworthiness apply for a loan. If a bank advertises with a credit-related interest rate of, for example, 3.9 percent, this means that the borrower with a good credit rating may have to pay 4.9 or 5.9 percent interest, while other borrowers, whose credit rating is poorly rated, with an interest rate 11 , 99 percent have to calculate. Consumer advocates have long criticized these decoy offers, which merely pretend to consumers that the loan is cheap.
Installment loan depending on credit rating vs. Installment loan fixed interest
Banks with fixed-rate offers advertise their installment loans at an interest rate that applies to all borrowers, regardless of their personal credit rating. The amount of interest is then usually linked to the loan term and the loan amount. With these loans, consumers can quickly determine which provider is charging the lowest interest rates in a credit comparison. In the case of interest rates dependent on creditworthiness, loan applicants must always first obtain a personal offer in order to be able to compare the actual loan costs.
The new consumer credit directive from June 2010
A new consumer credit directive has been in place since June, requiring banks that advertise interest based on creditworthiness to always publish a representative example from which consumers can see how high the interest rate is for at least two thirds of borrowers. Since then, some banks, such as Agreebank, have started to work with interest rates that are independent of creditworthiness.