The maximum interest that a lender may ask a consumer is 12% lending interest that comes on top of the statutory interest rate. This statutory minimum rate has been set at 2% since January 2015. The percentage can be adjusted and applies to non-commercial transactions with individuals and consumers. In July 2014, for example, the statutory interest rate was a full percentage higher. The total percentage of maximum interest at the moment (June 2016) is 12% + 2% = 14%. Mini loans, mail order credits and loans that are concluded without the intervention of the bank are also subject to the maximum interest.
A Gandalf loan is a credit which usually has to be fully paid within 30 days. A maximum of 14% interest may also be charged for these credits. However, the borrower must pay a much higher amount if he wants to have a mini loan. This is because in the case of mini-loans high costs have to be paid in order to receive the money quickly. These service or security costs do not fall under the maximum interest rate and constitute 20-25% of the loan amount.
A mini loan of 800 euros with a maturity of 30 days will have an interest rate of 14% x 800 euros = 112 euros on an annual basis. Divided by 12 months, this is just over 9 euros per month. That is easy to do and will not be a problem. However, the deposit costs of the mini loan of 800 euros are considerably higher and amount to approximately 20% of the loan amount. The high costs stem from the high risk that the lender runs by lending money to people with a negative credit score. From experience, the lenders know that the mini loans are often not paid back on time. The ordinary banks therefore refuse to provide credit to people with a negative credit score. If the borrower fails to pay off the mini-loan in its entirety, extra costs will follow (collection costs, reminder costs). So think carefully whether a mini-loan is the right choice for you. A revolving credit is not only much cheaper but also easier to repay.