Repayment Rate
The repayment rate is the percentage of the loan principal that is repaid annually - excluding interest.
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Detailed Explanation
The repayment rate determines how quickly a loan is paid off. It is a central parameter in loan planning and affects both the monthly burden and the total cost of the loan.
Important aspects of the repayment rate: - Higher repayment = shorter term = less interest cost - Lower repayment = longer term = higher total costs - With annuity loans, the repayment portion increases automatically
Typical repayment rates: - Mortgage: 1% - 3% initial repayment - Consumer loan: Variable, often 5% - 20% - Car loan: Usually full repayment in 3-6 years
Repayment substitutes: Instead of regular repayment, a repayment substitute product (e.g., life insurance, building savings contract) can be saved. However, this variant carries additional risks.
Calculation Formula
Annual repayment (EUR) = Loan amount × Repayment rate (%)Practical Example
With a loan of 200,000 EUR and 2% repayment, 4,000 EUR is repaid in the first year. At an interest rate of 3%, the annuity is 10,000 EUR (of which 6,000 EUR is interest).
Legal Basis
§489 BGB (Special termination for loans)