Provision-free time and payment

Hello,

we have an offer from a bank with a 6-month interest-free period and thereafter an interest rate of 0.25% applies.

What does that mean?

Assuming I receive an amount of 200,000 on 01.02., I pay no interest until the end of July. What happens if, by that date, for example, 150,000 in invoices have already been paid? On which amount will interest be charged from 01.08.? Who decides when and why one must start repaying the loan?

Thank you very much!

Hello,

we have an offer from a bank with a 6-month interest-free period and after that 0.25% interest applies. What does that mean?

It means the bank holds your loan amount ready for disbursement for 6 months without charging you interest for it. If you do not withdraw the full amount within those 6 months, you pay this 0.25% interest for the service of the bank keeping your loan ready for disbursement.

Assuming I receive an amount of 200,000 on 01.02., I pay no interest until the end of July. What happens if, for example, 150,000 in invoices have already been paid by that date? On which amount will interest be charged from 01.08.? Who decides when and why the repayment of the loan must begin? Thank you very much!

Interest and repayment on a normal annuity loan always start at the time you receive the first (partial) sum. Example: You request the first part to be disbursed. Then the first installment is immediately debited from you (usually at the end of the month). The annuity (as the name suggests) is always the same amount. The interest and repayment portion of the annuity are calculated based on the amount disbursed.

Hope this helps you.

Best regards

I received information from the bank that as soon as I use even one euro of the provided amount, the full repayment of the entire sum (not just the used amount) becomes due immediately.

Is that common practice?

Let's put it this way... not uncommon. This is one of the "hidden" costs of financing. In principle, however, you shouldn't be charged a commitment fee for an amount not yet drawn. I would use this argument to negotiate with the bank... Either you pay interest only on the amount drawn and commitment fees apply to the amount not yet drawn OR from the first withdrawal of an amount, the full interest is due but no commitment fee.

Otherwise, the bank would be charging fees twice for undrawn funds, once as if it's already paid out (interest payment) and once as if it's available for withdrawal (compensation for the bank temporarily holding this money ready).

As you can see, interest is not the only criterion when it comes to getting a "cheap" loan. With other banks, the condition can be to become a cooperative member (share purchase €50–200), a required life insurance policy, a mandatory appraisal of your purchase object by the bank's own assessor, or something similar. When it comes to inventing hidden costs, some banks are really creative!

It will surely help you to get offers from several banks. There is, for example, a good publicly traded company that can do this job for you

Best regards

These 0.25% commitment interest charges apply to me per month, which would be 3% per year. That can really add up.