It seems that rates are historically low, but is it a reality for everyone? A low rate loan, but is it a consumer loan, a home loan, a work loan, etc. And on the other hand, are these low rates accessible to all or are they reserved for a financial elite? To find the lowest possible rate of credit suitable for the project and the profile of each, we have gathered the main explanations and made available our tools which propose the rankings of the best rates and allow to obtain a cheap credit.
Low rate credit: understanding the principles of credit
The cost of a credit billed to the customer is made up of 4 elements for the financial organization that sells it:
- the price at which the organization borrows the money itself on the financial markets
- operating costs (paying employees, renting offices, advertising…)
- cost of risk (if customers don’t reimburse, it’s a loss to the organization)
- his margin
The first of these 4 points means that when Bankate or Viloan lends a 10,000 USD loan to a client, they themselves went to borrow these 10,000 USD on the financial markets at a certain price (they buy in bulk and resell at retail).
And it is precisely these “wholesale” money prices that make it possible to make low rate credit at the moment. Because getting money in the financial markets doesn’t really cost much as our graph shows. The central banks, the ECB for Europe and the Fed for the United States offer the lowest rates.
Conclusion: the price of the “raw material” has never been so low for credit organizations in recent years. But do they pass this down on to their customers so that they can take advantage of good consumer or real estate credit rates?
Get a low rate in consumer credit
Consumer credit mainly includes car loans (including second-hand credit), work loans, personal loans and revolving credit. Consumer credit rates should benefit from the fallout we saw in the previous paragraph. However, figures from the Credither clearly show that the fall passed on is quite minimal, as our graph shows:
- effective consumer credit rate below 3000 USD
- effective consumer credit rate between 3,000 USD and 6,000 USD
- effective rate of consumer loans above 6000 USD
Note that in May 2013, the rates fell suddenly only in connection with a reform of the usury law and not for a change of strategy in the pricing of financial organizations.
Conclusion: to benefit from a low rate credit as a consumer, one cannot immediately trust the offers on offer since the fall in market rates has not really been reflected in the prices practiced since 2013. Even if the costs of risk have certainly increased, that should not explain everything.
Find the lowest rate
To find a low rate loan to change your car (see car loan rate), do some work or meet a need for money, we have therefore developed a comparison of all the offers of the largest credit organizations .
But we don’t stop at proposing a classification of the lowest credit rates according to the project. We have set up a system which allows automatic evaluation without commitment from the cheapest organization. A way to ensure that it is always the best credit, all in real time. If the file is unlikely to pass, it is possible to query the second best offer and so on.
Example of a low-rate credit comparison
Take the example of a 5000 USD loan to do small jobs:
Least expensive fixed taeg rate: 4.70% / monthly: 93.45 USD cost of credit: 607 USD
Most expensive fixed taeg rate: 12.90% / monthly payment: 111.71 USD cost of credit: 1702.60 USD
Here, the rate of credit works between 2 organizations as well known as each other, we can end up paying more than 1000 USD more.
Low rate credit: home loan
In the field of mortgage, the trend is not at all the same as in consumer credit. There is a real impact of lower rates on customers. It is currently possible to benefit from low-rate credit as it has never been possible before, as shown in our last graph (data available on the Credither site)
It is impressive to see the difference with consumer credit over the same period.
Between 2013 and 2016, the rate practiced in terms of mortgage decreased by around 30% from 4.5 to 3 on average.
This is also why the mortgage market was mainly supported by renegotiating mortgage loans. It is still possible to save tens of thousands of USD. Again, we have set up a credit comparator to obtain low-rate credit throughout France, adapted to each person’s profile.