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Why do banks give a loan with negative interest?

Negative interest loan

Negative Interest Loans - Profit or Risk?

Some institutions have been granting a loan with negative interest since 2017. These are loans in which the borrower has to pay back less money than was loaned to him. At first glance, this is a profitable campaign for the customer. Nevertheless, financial experts warn against hasty decisions.

Negative interest loan - what is it?

This online loan is characterized by the fact that the borrower has to repay a smaller amount than he has taken out. The bank “gives away” money, so to speak. The level of interest is determined by the respective institute. Since there is now competitive pressure in the area of ​​credit with minus interest, some providers even set the effective annual interest rate at minus three percent. But not every customer receives a loan with negative interest. You have to give the bank your details in advance so that they can take a look at your creditworthiness.

These conditions apply to a loan with negative interest

In order for a customer to be eligible for a loan with negative interest, they must have a good credit rating - a negative entry by Schufa excludes you from a loan with negative interest immediately. So the banks thoroughly check the potential borrower. Furthermore, the sum is currently limited to 1,000 euros at all institutes. Time is an important factor in negative interest loans. The offers at most banks only have a term of a few months - if you are interested in a loan with negative interest, you have to act quickly.

In addition, a loan with negative interest may only be granted once per person - unfortunately it is not possible to build up an additional income with this type of loan. If you have already applied for a loan with minus interest, you will have to forego this benefit in the future. You should therefore consider carefully whether you want to save the "privilege" for a later date. However, many potential customers are still wondering why banks give loans that at first glance appear to be associated with a loss. In short, a loan with negative interest is a bait with which the institute wants to attract long-term customers.

Great demand for loans with negative interest rates

Due to the advantageous conditions, the loan with negative interest is very popular. Interested people had the opportunity to take out a loan with negative interest for the first time in 2017. At that time, a loan with an interest rate of -0.4 percent could be taken out. According to press reports, the campaign was very well received by customers. The number of requested credits was then in the four-digit range. From this point of view, it is not surprising that the campaign was repeated in 2018. But even if the offer seems altruistic at first glance, there is also a certain risk associated with it.

Criticism comes from experts

Both financial experts and consumer protection are warning of the action. There is criticism above all with regard to data protection - according to experts, banks want to get the contact details of borrowers and use them later for advertising purposes. In addition, not only the employees of the bank concerned, but also other companies connected to the address memory receive the sometimes very extensive data. There were already complaints in 2017. Advertising was sent to potential borrowers even though they were not granted the negative interest in the first place. If you are considering a negative interest loan, you should be aware that you are giving away a lot about yourself.

Don't let yourself be rushed

Potential customers should not allow themselves to be rushed despite short-term campaigns and should find out more about the loan with negative interest. It is important to remember that the loan must be repaid on time later. In addition, every loan is noted in the Schufa - should you fall into arrears with regard to the return of the loaned amount, you risk a negative Schufa entry here. If you still decide to take out a negative interest loan, you should invest the money with a good interest rate. Then you will be able to make a profit with such a loan.

Is it worth taking a loan with negative interest?

In view of the amount borrowed, this type of loan is a small loan . This can be worthwhile for people who are considering a smaller purchase, have a very good credit rating and need a cash injection. However, before you decide on this loan, you should make sure that you are able to repay the loaned amount in the specified period.

My name is Quang Lam and I work at Hegner Möller GmbH as Marketing Director. I am very interested in finance and sports. In my free time I like to go running and I also run a running blog. For the Best Credit blog I only write about topics that really interest me.


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