In 2018, banks ‘and credit providers’ interest rates and best credit ratings averaged 10.74 percentage points (80.95% interest rate differential). Surprisingly, the difference in interest rates is even greater with lower creditworthiness. Here even between the average cheapest and most expensive interest rate even 15.97 percentage points (83.05% interest differential).
Comparable large interest differences exist not only with best and lower creditworthiness, but with all creditworthiness. The credit portal smava comes to this conclusion after analyzing interest rate offers from 25 banks and credit providers . 2) Regardless of the creditworthiness, this means for all potential creditors: Those who refrain from a credit comparison are likely to pay too much.
Credit comparison can save more than best credit
The difference in interest rates is so great that someone with a lower credit rating can find a cheaper interest rate than a best creditworthy person who does not settle for a loan. “Having a loan comparison can in many cases save more money than the best creditworthiness,” says Alexander Artopé, managing director of smava. In 2018, borrowers with a low credit rating were able to conclude loans at an annual average rate of 3.26 percent by means of a credit comparison. Those who renounced a credit comparison risked to pay up to 13.27 percent APR despite their excellent creditworthiness. Borrowers with a low credit rating could thus conclude cheaper loans in 2018 by comparing
Low-credit borrowers can save the most
Low credit borrowers benefit most from a loan comparison. Because with low creditworthiness, the interest rates differ the most. Last year, the difference between the average cheapest and the most expensive interest rate was 15.97 percentage points (83.05% interest rate differential). With a loan of 15,000 euros over a term of 48 months could save by a loan comparison 5039.67 euros (83.38%) in interest.
But even borrowers with the best credit should not blindly trust that they will get the cheapest deal on the market. Also for them a credit comparison is very worthwhile. Even with the best creditworthiness, interest rates differed by an average of 10.74 percentage points in 2018 (80.95% interest differential). With a loan of 15,000 euros over a period of 48 months, they were able to save 3368.76 euros (81.24%) in interest through a loan comparison.
About the investigation
1) The creditworthiness provides information about the probability of payment of a borrower. To assess the creditworthiness of a borrower, smava has taken into account individual Schufa scores and other borrower information, such as household net income.
2) Interest rate differentials were calculated on the basis of all interest rates offered by 25 banks and credit providers in 2018 on smava’s credit marketplace. All loan amounts, repayment terms and creditworthiness were taken into account.
Germany’s big credit portal makes loans for consumers transparent, fair and cheap. Through digital processes smava provides an overview of 70 loans between 1,000 and 120,000 euros from 25 banks, credit providers and private investors. This allows consumers to choose the loan that suits them and lock it directly. On average, borrowers pay smava more than two percentage points less interest than the national average. So far, smava brokered installment loans totaling more than 5 billion euros, of which more than 2 billion euros in 2018 alone. As one of the largest German fintech companies based in Berlin, smava employs more than 450 employees from more than 40 nations. smava is led by an experienced finance and technology management team. Renowned investors such as Vitruvian Partners, Verdane Capital,