Who has money to spare

Repay a loan or invest? Expert advice

Anyone who has money on the side despite inflation should think carefully about whether or not to make a special repayment on a current loan. An expert from the Tyrolean Chamber of Commerce explains what to look out for.

Interest rates are still at a high level as a result of inflation. For those who have money left over despite the inflation, the question arises as to whether it is better to use it to pay off a current loan or to invest the savings.

According to Michael Posselt, Chairman of the Tyrolean Financial Services Association of the Chamber of Commerce, "the key interest rate is expected to be downgraded again by the European Central Bank towards the middle of the year".

Variable interest rates adapt to the current market situation and can reflect falling interest rates.

Michael Posselt

Decision dependson the type of interest rate
This would therefore reduce borrowing costs. According to the expert, the decision depends on the type of interest rate. For consumer loans with high interest rates, Posselt advises a quick repayment.

"For real estate loans with low, fixed interest rates and long terms, on the other hand, alternatives should be considered. This is because variable interest rates adjust to the current market situation and can reflect falling interest rates. This could well justify a wait-and-see approach."

In principle, special repayments should be considered carefully, as they are not free of charge for all loans, warns expert Posselt in conclusion.