CategoryCar Loan

The loan processing fee

 

 

Until 2014, the collection of processing fees for personal loans was quite common. However, in May and October 2014, the Federal Court of Justice ruled that the processing fees charged by banks and savings banks were unlawful. These judgments mainly relate to private consumer credit, installment and car loans or loans for real estate financing.

Credit processing fee

For example, the processing fees were charged for checking the creditworthiness of a customer and for organizational matters. Thus to obtain data of the Schufa or Creditreform and to calculate the creditworthiness of the customer. However, the court ruled that such activities are purely in the interest of the bank and thus are not attributable to the customer.

The processing fees averaged between one and four percent of the loan amount spent. According to the court order, customers who paid such a personal loan processing fee less than ten years ago may claim this amount back from their bank or savings bank. However, the customer has to become active himself. The credit institutions do not automatically pay the processing fees back. This refund must be requested accordingly. Sample letters are available online that can be downloaded and printed out.

Inadmissibility of the processing fees

The inadmissibility of the processing fees was decided on 13 May 2014 by the Federal Court of Justice in two revision proceedings (Ref. XI ZR 170/13, XI ZR 405/12). In these proceedings, a one-time processing fee of 1,200 euros was levied by Postbank. The Consumer Protection Association also complained that the National Bank’s General Terms and Conditions imposed a one-per-cent processing fee. The judgment explicitly spoke of consumer credit. Thus, personal loans were assessed accordingly, installment loans for a television, a car or furniture.

According to the Civil Code, real estate loans are also considered consumer loans. However, the concrete cases of the judgments were not about real estate financing. However, they were not excluded. The court’s arguments also apply to the nature and form of real estate loans. In this respect, even consumers with a real estate loan are entitled to claim back their paid processing fees.

For subsidized loans such as KFW loans, the processing fees remain effective. In these cases, the bank or savings bank would have provided a genuine service to the client, acting as a mediator between the client and the promotional bank. The district court of Itzehoe declared these processing fees on 01.07.2014 and the district court of Bückeburg on 11.09.2014 justified (Az. 1 S 187/13, Az. 1 S 60/13).

Scope of current BGH judgments

Scope of current BGH judgments

The development banks in general argue that the current BGH judgments do not apply to them. They would process and award the loans in accordance with public law. Landeskreditbank Baden-Wuerttemberg was granted an appropriate hearing by the District Court of Stuttgart on this issue. Thus, this bank did not have to pay back the processing fees for a loan – judgment of 26.08.2014 (Az. 1 C 1279/14).

The processing fees or termination fees for home savings contracts are not affected by the judgment of the Federal Court. On the contrary, these fees have already been expressly declared to be correct in another ruling of the BGH of 2010. However, if the building society lends a loan and then calculates processing fees, the situation is unclear. Presumably, these fees are then not legally effective, but clearly not decided.

Even for business start-up loans, no decision has yet been made on the extent to which the processing fees may or may not be levied. For commercial loans, there is currently no effective case law with regard to the processing fee.

Is it worth to take out auto insurance linked to a car loan?

When looking for financing to buy a new or second-hand vehicle is very likely that we come across car title loans in dallas tx / TexasTitleLoan.net ヾ(๑⃙⃘´ꇴ`๑⃙⃘)ノ that offers us a lower interest rate. In some cases, contracting that insurance through the bank can be paid for, but in others, it will be more convenient to hire it through an insurance company and look for a cheaper car loan.

It is not mandatory to take out the insurance offered by the bank

The first thing that we must bear in mind before hiring any insurance linked to a car loan is that in no case are we obliged to contract the insurance offered by the lender entity. However, doing so through the same entity can mean an improvement in the terms of the car loan (lower interest rate or elimination of some commissions).

Therefore, before hiring the auto insurance offered by the bank, it is advisable to look for cheaper insurance and car loans with a lower interest rate. The Cofidis New Automobile Project Credit, for example, is a very good option, since it has an interest rate of 6.86% APR and does not include commissions or the obligation to take out a payment protection insurance linked to the car loan.

The cost of auto insurance is not always included in the TAE of the car loan

Another aspect that we must bear in mind is that the cost of auto insurance does not have to be included in the APR of the credit to finance the car. In the annual equivalent rate of the loans, only the cost of insurance that guarantees payment in case of death, disability or unemployment (that is, life insurance or payment protection) must be reflected. Therefore, we must read the fine print of the car loan to find out if the cost of the auto insurance offered by the bank is included in your APR or not.

If the cost of the insurance is not included in the annual equivalent rate, we must calculate if we pay for it to hire it or look for other cheaper car loans httP://Texastitleloan.net/Getting-Started-With-Title-Loans-In-Texas/. For example, if we want to finance the new car with a credit of € 15,000 at 5 years at 6.5% APR with an insurance that costs us € 400 a year, it will be more expensive than financing it with the Cofidis New Car Project Credit ( that has an interest of 6.86% APR) and contracting with another company an auto insurance that costs us € 300 a year. In the first case, we would pay € 4,609.54 by adding the cost of interest on the car loan and insurance, while with the Cofidis New Car Project Credit we would pay € 4,172.86, € 436.68 less.

Expenses that we must take into account before asking for a car credit

The cost of financing the car and the insurance will not be the only one that we will have to face when we acquire a new vehicle. These are the expenses associated with the purchase of a car:

  • The cost of the car loan: interest, commissions, linked products, notary expenses, etc.
  • The price of compulsory auto insurance.
  • The registration tax and the circulation tax
  • Other expenses: gasoline, maintenance, repairs, parking, etc.