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Variable and constant annuity



But why is the annuity loans so popular? With regard to annuities can be distinguished between constant and variable annuity (fake). What is special about the constant annuity is that borrowers and lenders from the very beginning a consistent credit rate for the entire term of the loan is set. As a result, that the interest portion decreases with each paid rate. At the same time the repayment portion increases accordingly, so that when the constant annuity, the annual rate remains unchanged, but changes the relationship between interest rate and repayment.

In the variable annuity, known as installment loans, the repayment rate always remains the same, however, the high. The variable annuity changes only the level of interest rates as a result of the repayment of the loan. As a result, reduce the annuity only by the savings interest rate over time.

Annuity loans are often issued by banks if customers approve a private loan. Namely, this constant rate enabling them to set up a reliable cost estimate. A large area of application is the real estate financing. The interest rate is laid down in Germany mostly in advance over five, ten or even fifteen years.
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Variable and constant annuity
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