The average German – he likes to travel, would like to have a large flat-screen TV and a luxurious car. Unfortunately, most of them cannot afford this from their salary. This is why loans with small installments are becoming increasingly popular. But is this form of credit really the right one?
Small loans offer your advantages
Consumers in Germany are increasingly opting for a loan with small installments. Regardless of whether you use it for a new and up-to-date mobile phone, a weekend vacation in a wellness oasis or for a washing machine, you seem to keep the monthly load low and have to do little. A loan with small installments is ideal for this. But you shouldn’t make the mistake and lose track of all your loans. Of course, the industry advertises with effective annual interest of 0%, but mostly here, too, interest payments are hidden in the small print after a certain period.
Those who take out a loan with small installments pay more
Small loans can quickly become a debt trap, especially for young people and people with little experience in handling money. Ultimately, the smaller the loan, the more interest you pay. This is the only way for the industry to benefit from low-rate loans. If you now take out 5 loans for small sums and small installments, you may have little to pay in individual cases, but the sum means that you will again have to pay a larger amount that will burden the monthly household budget. In addition, there is a certain interest payment on every loan with small installments. So you pay for each device that you buy in installments, more than if you pay for it immediately. That may only be a few USD, but if you take out several loans with small installments, it can quickly add up to several hundred USD.
So if you are flirting with a loan with small installments, you should check your household budget beforehand and go through various scenarios. Sometimes paying cash is just cheaper.