Repayment Rate
The repayment rate is the percentage of the loan principal that is repaid annually - excluding interest.
Key Takeaways
- •The repayment rate is the percentage of the loan principal that is repaid annually - excluding interest.
- •Repayment Rate belongs to the Finance category. We explain it step by step for newcomers to Germany.
- •With a loan of 200,000 EUR and 2% repayment, 4,000 EUR is repaid in the first year. At a 3% borrowing rate, the first-year annuity is 10,000 EUR (6,000 EUR interest + 4,000 EUR repayment).
meinetarife24 Editorial Team
Our independent editorial team carefully reviews all information and regularly updates the content.
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 a 3% borrowing rate, the first-year annuity is 10,000 EUR (6,000 EUR interest + 4,000 EUR repayment).
Legal Basis
Section 500 (2) BGB gives consumers the right to repay a consumer loan early at any time, in full or in part, effectively increasing the repayment. Section 489 BGB additionally governs the borrower's ordinary right of termination (e.g. after 10 years on a fixed rate).
Related Terms
Sources & Methodology
Our methodology: the meinetarife24 Editorial Team checks every definition against binding primary data sources and consumer-focused reference portals. We name the relevant legal basis, link related terms and update each entry regularly. We do not sell loans or tariffs ourselves. This explanation is provided purely for information.
- • Legal basis: Section 500 (2) BGB gives consumers the right to repay a consumer loan early at any time, in full or in part, effectively increasing the repayment. Section 489 BGB additionally governs the borrower's ordinary right of termination (e.g. after 10 years on a fixed rate).
- • Price Indication Regulation (PAngV) at Gesetze im Internet
- • Finanztip and the Deutsche Bundesbank as independent references on interest rates and consumer credit.
Go deeper on financing: Understanding the effective annual interest rate and Loan comparison.