Loans for zero-interest: curiosity or new normal?

Two different financial institutions now offer loans up to 1000 euros for three years without interest. Aimed at acquiring new customers. Will prevail this strategy?

I’m sales letters for an unusual new listing refers specifically to the European Central Bank (ECB). More and more, the central bank has lowered its key interest rate until it lies only at a measly 0.05 percent, writes the Internet portal “Check24” in the reasons for his offer “credit without interest.” Of which should now also benefit consumers. That’s why we offer a loan of 1,000 euros for a term of 36 months with no interest in. “In vain,” as the portal writes. True to the motto: As a saver, you have long enough annoyed about the zero interest rate era – enjoy this unique historical period would you prefer as a beneficiary of a gratuitous small loan.

What’s behind it? Is there really now not only savings accounts on which you do not get interested, but also loans for which you have to pay anything? And if so, why a company assigns such loans?

Two German portals offer loans without interest

After all, the new offer is not unique: there are, according to the FMH financial advice in Frankfurt at the moment two suppliers in Germany, where you can get such loans without interest and stuck behind which no impostor. Both offers you get 1,000 euros for 36 months without interest. In both cases, the offer is initially limited until the end of January, but the company reserves the right to an extension before. There are doing a credit check, who are not there, do not get the loan. Involved are each an Internet portal and a bank. It is the company to include an advertising effect, especially to acquire new customers – similar to the higher overnight interest rates offered by some online banks exclusively for this target group.

Investment: Who has the best funds?

The first offer comes from the Internet portal Smava, called Fintech, so technology-heavy small bank competitors. It provides loans from private to private, but also bank loans and will disseminate it and to be known. When zero-interest offer Smava working with the Fidor bank. The Internet platform subsidized credit manifest in the form that it takes over the interest of the Bank for this time for the customer. It provides an “interest bonus” as Smava called, so it must provide some advertising budget, who puts the money in the interest rate subsidies instead, for example, in television advertising or ads.

Thus Smava clearly hopes to attract additional customers with whom we can then do further business. “Who borrows 1,000 euro, which has possibly more credit needs,” explains Max fall of the FMH financial advice the consideration to cross-sell, completing lucrative business for a loss leader.

Customer acquisition minus is accepted

Behind the second offer, which comes from the comparison portal Check24, is lending 24, a so-called “White Label” (as it were a cheap brand) of Santander Consumer Bank, the German subsidiary of Spain’s largest bank. Here the business model seems to be something different from Smava, at least you can hear the circles of the participants. Here it is not so that the Internet portal subsidizing the interest on the bank. Rather Santander offers even the credits free of charge to order in this country to attract new customers – to Check24 accounted for only the cost of advertising and sales. Maybe, but this is also a subtle distinction – in both cases have Internet portal and bank an interest in advertising and customer acquisition and take it planned a decline in loans in buying.

Insanely expensive, this form of customer acquisition was not in any case fall calculates. The amounts were very manageable and correspond to what was usually spent on acquiring new customers. With a loan of 1,000 euros for 36 months, Santander renounces around 42 euro interest rates, but the bank 2 save up to 3 percent commission, which would be payable to an intermediary otherwise. For three years, the analysts anticipate 4 Euro administrative costs. The bank itself could refinance relatively cheaply, for savings they pay around 0.8 percent a year. “All in all, the bank has won a new customer for about 16 euros,” says Herbst.

Whether that now the “new normal” is it but even the parties have serious doubts. “Loans without interest are likely to remain more the exception,” it says in Check24. After all, the Internet portal has registered a sharp decline even in its very regular interest on installment loans that it conveys: To around 10 percent interest rates were dropped for last year alone, over the past five years by around 30 percent. But even with FHM one does not consider it likely that zero-interest loans would now as common as loss leaders in the comparison tables for a daily allowance.