Many want their own rental apartment when they are 18. Finally fled and get out of the parents’ house. But an apartment alone is not enough. You need furniture, TV, stereo, washing machine and everything else you need. That takes a lot of money, but those who have just turned 18 may not have that much money in their savings account yet. If the parents are not wealthy, many young people have no choice but to take out a loan for the facility.
Beware of overpriced facility loans
Many young people are blinded by the often tempting offers of the banks and grab them too hastily. You do not pay attention to the fact that an interest rate is mentioned in advertising that initially appears low. But the effective annual interest rate is important, which is always higher because the total cost of a loan is included here.
These include, for example, the processing fees and other costs. That is why it is so important to know the differences so that the offers of the banks can be compared better.
Payment protection insurance
Surplus debt insurance is certainly a practical thing. It protects the borrower in the event of failure of installment payments due to unemployment, illness or relatives in the event of the borrower’s death. Ultimately, however, it depends on the amount of the loan whether such insurance is necessary at all. This makes a loan more expensive and therefore the conclusion should be carefully considered. This is certainly not a question to secure the family, but who has his own family at the age of 18?
Beware of the overdraft facility
A tempting option is certainly to apply for an overdraft facility in the checking account. Choosing such a loan for the institution is not advisable because it is the most expensive loan ever. The banks are of course looking forward to such customers, because a lot of money can be made here. The interest can be up to 17 percent.
The advantage is of course that the account holder can take his time with the repayment and is also flexible in the amount of the installments. With a conventional loan, the monthly payments are contractually agreed. There is no if and but. Nevertheless, young people should not go into debt so early. A normal facility loan is cheaper and does not lead to overindebtedness as quickly.