To compare these costs, one can calculate the interest with a calculation model for one year and then get the effective annual interest rate. In some cases, however, you are not interested in the interest, but want to calculate the interest rate, for example. You just have to take and change the formulas. Below we have changed the formulas for annual interest, monthly interest and daily interest so that you can use it to calculate the interest rate directly.

## So you can determine the interest rate yourself

If you look at the interest rates of the credit institutions, they often appear arbitrary (even with the same type of credit).

Rather, the bank’s interest rate is subject to the same basic principle again and again: interest rate = refinancing + margin + risk.

They are based on the general interest rate level, cannot be influenced by you and are always roughly the same from door to door or from savings bank. Profit margin: The profit margin is the part of the interest that the house bank wants to achieve.

Of course, the range varies from house to house and from house to house. Because not every house bank is equivalent. Risks: This part of the interest reflects the individual risk of your loan from the perspective of the house bank or savings bank. This means that the house bank individually evaluates the credit risk and calculates an interest premium in order to compensate for this risk potential that flows into the interest rate.

In contrast to the interest components mentioned above, you can control the process costs by reducing the risk (from a bank perspective). In addition, the level of risk costs can vary between individual banks and savings banks, as each savings bank uses its own calculation formulas for credit risk.

### This means that you have to reduce the statistical risk potential that the house bank recognizes when lending to you.

As you can see, credit institutions today can generally carry out very differentiated risk assessments based on various criteria. However, this also means that you can have a lot of these characteristics and thus the interest rate: you may have to wait to apply for your loan until you get a better living.

If you also use this as capital, the interest rate rises even more (often significantly). In principle, the less debt you have, the better the National Bank’s credit rating. If it reaches a certain level of debt, it won’t even be able to give you a credit at all.

After that, you should first ask this house bank for a loan. She may assess your past good payment behavior and pay you at a higher interest rate than a house bank that you barely know.

Waiting could pay off with a cheaper interest rate. The home, which is also loan-financed, is the safest housing situation for many borrowers.

However, it gives you a few good tips on how you can set the interest rate yourself.