How does a negative interest rate work

Loans with negative interest rates - are there really loans with a profit?

Loan with minus interest - how does it work?

For years, interest rates have been so low that consumers can borrow money from the bank on very favorable terms. But lately some credit marketplaces have been offering negative interest rates on loans - so you can borrow money from the bank and have to repay less than you got. This usually applies to € 1,000 loans; there are rarely offers for sums up to € 10,000.

At -5%, for example, you would only have to repay € 950 for a loan amount of € 1,000 and would have "earned" € 50 on this business. The intermediary usually pays the difference to the bank. So at first glance it is a profitable loan for you. However, not everyone gets these loans.

Already knew? Negative interest rates are the specter of savers. The key interest rate of the European Central Bank has been very low for several years. This can lead to the banks paying negative interest on their deposits at the ECB and therefore feeling compelled to pass them on. This means that, as a saver, you will not receive any interest from the bank for working with your money, but instead you will have to pay interest on your savings. The negative interest is therefore often referred to as penalty interest. Theoretically, this system also works the other way round: If the banks pay penalty interest on their deposits at the ECB, it can be cheaper for them to park the money with customers - in the form of attractive loans.

Who can get a negative interest loan?

With every loan request, the bank checks your creditworthiness, i.e. the probability with which you can also repay the loan. This is usually done with the help of credit agencies such as SCHUFA. Every loan request and every loan taken out are noted here and play a role in future loan requests.

It is no different with loans with negative interest rates. You only have a chance of getting credit if you have a good credit rating. In addition, some offers are only reserved for new customers and can only be used once. In this way, the providers protect themselves from customers using the loan at negative interest as an alternative to classic investment strategies.

Find your low-interest loan now and compare the best offers in our loan comparison.

Does the negative interest loan have a catch?

Yes. You should pay attention to offers that sound like the bank wants to give you something. Consumer advocates are therefore critical of loans with negative interest rates. They consider it to be a marketing measure for the intermediary portals and point out that the cost-benefit ratio of the offers is not right. Specifically, consumer advocates criticize the following points on the loan with negative interest:

Keep data protection in mind

As a customer, you receive cash with a negative interest loan, but you have to provide something else: your data. Because as with any regular loan request, you have to provide information about yourself, your finances and your creditworthiness. In addition, some providers require access to your account data. According to a payment services directive that came into force in 2018, this is legally possible, but consider carefully whether a small loan of € 1,000 is worth providing a company with a large part of your personal and economic data.

A SCHUFA entry is made

Since a mini loan of € 1,000 works like a regular installment loan, both the application and the conclusion of the loan agreement are saved at SCHUFA. This means that even this small loan will have a negative impact on your future creditworthiness. It is therefore advisable to carefully consider whether a low profit is worth lowering your SCHUFA score for the future.

Negative interest is a marketing measure

Consumer advocates criticize that the negative interest loan is a marketing trick of the online portals. In fact, up to now no bank has granted negative interest, but rather the website through which you click on the offer. On closer inspection, it quickly becomes clear that the banks charge regular interest rates and the portals pay the difference to the minus interest. This means that the online provider pays the accruing interest and puts additional money on top of it so that you as a customer effectively receive a negative interest rate and earn money on the loan. Depending on the offer, the agents pay more than € 100 per customer. Ultimately, a loan with a negative interest rate is always a lure offer: The providers buy your data, send you newsletters and promotional offers afterwards, and hope that you will later take out larger loans via their website.

Can I use a loan with minus interest to reschedule debts?

Theoretically yes. For negative rate rescheduling, you need to read up on the exact terms of your original loan. If your remaining debt is less than € 1,000 and the bank does not charge a prepayment penalty for the interest it misses, the negative interest loan is actually an option to replace your old loan.

If a prepayment penalty is required, you need to calculate exactly whether this fee exceeds the savings of the mini-loan. For a loan that has a term of more than 12 months, this may not exceed 1% of the loan amount. In the case of a loan with a shorter remaining term, the prepayment penalty may not exceed 0.5%.

Is there a loan with minus interest for mortgage lending?

If you are planning to finance a property, the possibility of negative building interest could soon arise. Some banks are probably no longer averse to this option, but there is still disagreement on the market as to whether interest-free mortgage lending should be introduced. Read all the relevant information and current changes on the subject in our focus on negative building interest rates.

Conclusion: is the loan with negative interest serious?

Yes. From a purely legal point of view, providers of negative interest loans are on the safe side. However, as a customer you have to be clear: you are selling personal data and risking your SCHUFA score for relatively little benefit. Despite the low credit line, only a few customers get the minus interest loan, as a high credit rating is required.

If you are considering taking out a loan anyway, the loan with minus interest can be a welcome option. It is best to find out more about offers with minus interest and their alternatives in our loan comparison.

Even if the loan with minus interest is just a publicity stunt, it can be a cheap option to replace your overdraft facility at short notice. According to the financial test, the overdraft interest on current accounts is an average of 9.68%. If you slip into the overdraft, it will quickly have a negative impact on your creditworthiness. Then you are definitely better advised with an installment loan - all the better if you pay minus interest on it.