Credit calculation: That’s how it’s done!

When calculating the loan, you must pay attention to the interest and the term. The higher the interest, the higher the total credit costs. If the maturity increases, the cost of the loan can increase significantly.

As a borrower, you can choose the term and the loan amount yourself- 3 external links. You have an only indirect influence on the interest on the loan because it is set by the bank. However, at the bottom of this page, you will find four practical tips on how to reduce the cost of credit.

If you take out a loan, you can significantly reduce the loan amount by considering the following four tips:

  • Select the shortest possible term: The shorter the term of your loan, the lower the total interest costs. If you finance, for example, 10,000 euros, with a maturity change from 84 to 60 months already savings of altogether 500 euros and more are possible.
  • Comprehensive insurance can only be concluded with a high loan amount: A residual debt insurance can significantly increase the total loan amount. For loans from 10,000 euros, the cost of such a hedge calculated over the term is quickly over 1,000 euros. What can be useful in long terms, depending on your job situation, is usually unnecessary with smaller loans and terms of less than two years. These costs can usually be saved then.
  • To accept a second borrower with regular income: You increase your credit rating significantly if you apply for the loan in twos. If both have a steady income, the safety of the bank is higher and interest rates fall. This will make the loan cheaper overall.
  • Collateral for the bank: The more collateral a bank has, the less interest it will charge. For example, if you have a registered mortgage, you can also use it as collateral.


Factors of the credit calculation

 Factors of credit calculation

In credit calculation, four factors generally play an important role. In addition to the amount of the loan, term and interest rate, as well as the nature of the repayment, determine how high monthly installments or the total credit costs are.

  1. Amount of loan amount: The amount of the loan amount has the highest impact on the monthly installments. Thus, borrowers have a strong influence on the monthly burden by choosing the amount of the loan. The maximum loan size depends on the creditworthiness of the borrower. You can not apply for unlimited loans. This ensures that borrowers can repay their debts at all. Each borrower should also adjust the loan amount to actual needs.
  2. Duration of the term: The term affects two parameters of the loan. On the one hand, it determines the parts to which the total loan amount is distributed to the monthly installments. On the other hand, the total interest costs depend directly on the duration. The longer the term, the more interest must be paid. Therefore, it is generally recommended to choose the runtime as short as possible.
  3. Interest rate: With the interest rate, the bank indicates how many interests you have to pay for the desired loan amount per year. If the nominal interest rate is given, this is the net return. Here, for example, no closing fees or repayments are taken into account. The APR, on the other hand, includes all costs associated with the loan.
  4. Type of amortization: The banking industry generally distinguishes between three common types of amortization. The installment loan is most commonly used for consumer credit. The monthly repayments are always the same. Interest expense and annuity decrease with increasing eradication. The annuity loan is often used for mortgage lending. Here also constant rates are repaid over the entire term. However, the interest portion at the beginning of the repayment is higher than the repayment. Thus, at the end of the term remains only the remaining debt. The term loan refers to a type of loan in which the borrower repays the loan only at the end of the term. This loan is also suitable for real estate financing if the borrower can expect to pay more on a fixed date.

“Pa” means “per year”


When specifying the interest is usually the abbreviation “pa”. This is the abbreviation for the Latin “per annum”, which means “per year” in German. 3 percent pa means 3 percent interest per year.


Formulas for credit calculation


How to calculate an installment loan:

n = D + B ÷ R – (D × p ÷ 100)

  • n = number of installments
  • D = loan amount
  • B = processing fee
  • R = maximum rate
  • p = interest rate per month

How to calculate an annuity loan:

The monthly installments of an annuity loan are determined by the annual annuity. This is the amount that must be repaid to the bank per year, including interest.

  • An annual annuity is calculated as follows: Annual annuity = C 0 × ANF n, i
  • Here “C 0 ” stands for the total loan amount. The abbreviation “ANF n, i ” represents the so-called annuity factor and is calculated as follows: i ÷ (1 – (1 + i) -T )
  • If you only want to calculate the monthly installments, you get the following formula:
    Monthly rate = C 0 × (i ÷ 12) ÷ (1 – (1 + i ÷ 12) -T n )
  • T n = total number of monthly installments.

This calculation takes into account that the repayment interest portion decreases with increasing maturity as the repayment installment increases.

You have to pay attention to that

 You have to pay attention to that

When you calculate a loan, you first have to be aware of the term, the total loan amount and the interest. But there are other factors that influence the cost of credit:

  • Annual percentage rate: Always check if the bank pays the annual percentage rate. This interest includes possible fees. Using the APR, you can calculate the actual total credit cost. In addition, the annual percentage rate of charge helps to calculate the annuity. It ultimately determines how high the monthly burden actually turns out to be.
  • Processing fee: Many banks charge a processing fee for lending. This will be offset against the total credit costs. The amount of the processing fee depends on the amount of the loan and is often one percent.

Check admissibility of the processing fee!


However, make sure that the processing fee of the bank is even allowed. In 2014, there was a ruling by the Federal Court on this issue, which has declared the fees for many loans inadmissible.


  • Flexible interest rates: In the case of construction loans, there is often the possibility of variable interest rates. This can be an advantage for borrowers when interest rates are falling. For consumer loans, a flexible interest usually has no clear advantage. In low-interest-rate phases, mortgage lending also requires a long-term fixed interest rate.
  • Remaining debt insurance: These insurances are actually not directly related to the additional fees. However, many banks offer such a hedge. However, this security is usually associated with very high costs, which increase with the amount of the loan.

calculate monthly rate

 calculate monthly rate

The monthly rate is calculated using three parameters:

  1. Loan amount: what amount should be funded?
  2. Duration: How long should this amount be funded?
  3. Interest rate: What is the interest on the loan amount?

First, the interest payment is calculated for each maturity year. Subsequently, the interest is added to the net loan amount and then divided again by the term. This results in the monthly interest.

Many banks round out the monthly installments that have to be paid on a regular basis, whereby the final installment usually consists of a “crooked” amount. If you do not want to calculate the monthly rate yourself, you can easily use a loan calculator on the Internet, such as that offered by FinanceScout24.

An example of a repayment plan

 An example of a repayment plan

For example, a repayment plan for a loan in excess of 10,000 euros, which should be repaid at a monthly rate of 600 euros at an annual interest rate of 4 percent. This loan will pay more interest at the beginning than at the end of the term.

The total credit amount in this example is 10,305.80 euros. If the monthly rate were reduced to 400 euros, the cost of the credit rose by more than 150 euros.

month debt
previous month
payment by installments
at the end of the month
from that
from that
new debt
at the end of the month
1 10,000.00 600.00 33.33 566.67 9,433.33
2 9,433.33 600.00 31.44 568.56 8,864.78
3 8,864.78 600.00 29.55 570.45 8,294.33
4 8,294.33 600.00 27.65 572.35 7,721.97
5 7,721.97 600.00 25.74 574.26 7,147.71
6 7,147.71 600.00 23.83 576.17 6,571.54
7 6,571.54 600.00 21.91 578.09 5,993.45
8th 5,993.45 600.00 19.98 580.02 5,413.42
9 5,413.42 600.00 18,04 581.96 4,831.47
10 4,831.47 600.00 16.10 583.90 4,247.57
11 4,247.57 600.00 14.16 585.84 3,661.73
12 3,661.73 600.00 12.21 587.79 3,073.94
13 3,073.94 600.00 10.25 589.75 2,484.18
14 2,484.18 600.00 8.28 591.72 1,892.46
15 1,892.46 600.00 6.31 593.69 1,298.77
16 1,298.77 600.00 4.33 595.67 703.10
17 703.10 600.00 2.34 597.66 105.45
18 105.45 600.00 0.35 105.45 0.00

Credit calculation with the loan calculator

 Credit calculation with the loan calculator

With FinanceScout24’s online loan calculator, you can self-calculate loans in just a few clicks. In this way, you will quickly know how much money you have to spend each month on the loan you want and how the monthly installments change at lower interest rates.

  • Calculating loans online with the simple loan calculator: If you want to take out a loan to finance a car or to reschedule, this loan calculator will help you. Based on the desired loan amount and the term, FinanceScout24 will show you suitable offers from various banks. For example, you can use the displayed monthly installment to decide if you need to choose a longer term to finance the loan you want. At the same time, the representative example shows the total loan amount of the respective provider for the terms used as the basis for calculation.
  • Mortgage calculator: This special loan calculator from FinanceScout24 is designed for the calculation of construction loans for new construction or purchase. It calculates loans based on the location of the property, the type of financing as well as the repayment installment and debt interest. In the credit comparison, you will see different offers. These are sorted by the monthly rate and the APR. The offers are always based on a representative example which also shows the total credit costs. If you have an offer, you can contact the respective financing partner directly via a button in order to arrange an individual consultation. With the help of the construction loan calculator, you can set up your financing and repayment plan in advance and thus have an advantage in the credit conversation with the bank.