Online Loans Are Cheaper Than Branch Loans


What has hitherto only been a subjective statement among potential borrowers is now confirmed by a study by the German Institute for Service Quality ( DISQ ): Online loans are often cheaper than loans taken out in the branch. This knowledge, gained in the study, applies not only to installment loans from direct banks, but also to loans from so-called branch banks. This is the conclusion of the German Institute for Service Quality (DISQ). This has tested on behalf of n-tv, the terms and consulting services around installment loans from 15 German retail banks. This shows that it is possible to generate significant interest margins on the effective annual interest rates for a loan. For a loan of 5,000 euros, the banks surveyed by DISQ demanded annual interest rates of between 4.12 and 8.99 per cent per annum.

Loans on the Internet usually much cheaper

 Loans on the Internet usually much cheaper In particular, the result of the DISQ study surprised at one point. The surveyed retail banks offered on their website for one and the same loan significantly cheaper interest rates than in the branch of the bank. According to the market research institute, customers of tested financial institutions receive an online loan with an average annual interest rate of around 5.36 percent. However, if the same loan is taken out by the prospective loaner in the local branch office, the average interest rate for the branch loan will then be 6.67 per cent higher by a quarter per annum – mind you, on equal terms! So it stands to reason that as a lending customer for a branch loan you have to pay for a possible personal consultation by a member of staff at the bank branch with a correspondingly higher interest rate. Which is basically justifiable and many credit customers would be prepared to accept them without a corresponding contradiction. Assuming that a corresponding credit counseling for a branch loan by an employee is guaranteed. Therefore, borrowers have to pay more for personal advice. For many, that’s fine – as long as the quality is right. But even in this point, the DISQ testers have found significant deficits in the tested financial institutions.

Quality of advice on loans is only “satisfactory”

 Quality of advice on loans is only "satisfactory"

Overall, the ruling on the quality of banks’ advice on loans is relatively modest. All in all, this means that, from the perspective of the DISQ, this quality of advice provided to the examined financial institutions can only be rated as “satisfactory”. The shortcomings identified in personal advice include, among other things, that often the individual needs of the customer were only superficially determined by the bank consultants. Another criticism is the mediation of the so-called residual debt insurance, because in almost every tenth consultation, the customers felt forced to conclude such. In the process, consumer advocates have been recommending to take out a residual debt insurance policy with the bank for years, as these are often far too expensive and are not always customer-friendly in terms of conditions. On the other hand, the DISQ found the positive response to the on-site advisory service that no bank submitted a loan request but only a neutral condition request to the Schufa. It does not negatively affect the customer’s Schufa score. The complete study of the DISQ is available here.