Gender pay gap: women pay higher interest rates and receive loans less frequently

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Heidelberg. Equal pay day on 17. March brings the differences in earnings between men and women into focus. There is still a significant pay gap between the sexes. This also has an influence on the loan. Verivox analyses show: loan applications from women are rejected more frequently and female borrowers are less likely to receive a very favorable interest rate. But with a few simple tips, women can secure very good credit terms despite the salary disparity.

Women earn over 600 euros less

Those who apply for a loan provide information about their monthly net income in the process. Women who took out a loan via verivox in 2019 earned an average of 1.947 euros net – 637 euros (25 percent) less than male borrowers. Women more often work part-time and more often have interrupted employment histories. They also work more often in industries with low pay levels. Part of the differences in earnings can be explained by such structural differences in the employment relationships of men and women.

Gender pay gap affects credit score

Those who earn less are also less able to take out such high loans: the loan amount for women is on average over 3.200 euros lower than men. And that's not the only difference.

"The disposable income is an important criterion for banks to assess creditworthiness," says oliver maier, managing director of verivox finanzvergleich gmbh. "Those who earn less find it harder to get a loan approval and more often have to pay higher interest rates." Three out of four men who apply for a loan via verivox receive a loan approval – for women it is only slightly more than two thirds (69 percent).

Expert tips for more favorable conditions

"Despite the unequal payment, women can also get very good credit conditions," says oliver maier. A comprehensive provider comparison is particularly important. More than half of the women (54 percent) who compare loans via verivox receive a loan offer with an interest rate below 3.5 percent. Men secure themselves this very favorable interest admittedly still more frequently (66 per cent). But according to bundesbank statistics, installment loan borrowers had to pay an average of as much as 5.91 percent interest in germany in 2019. Among female verivox customers, less than one in seven (14 percent) pays loan interest at this level.

Who applies for a loan together with another person, also often receives more favorable conditions. "A second borrower with their own income improves their credit rating," explains oliver maier. "Because both borrowers jointly guarantee the loan, the risk for the bank that the loan will not be repaid decreases. Thus it can offer a more favorable interest rate."Who takes up an installment loan in pairs, pays on average 21 percent less interest than borrowers who take out their loan alone.

Not only spouses and partners can take out a loan together. "Family members are just as eligible as close friends," says oliver maier. For many women with a loan request, this is important information. Because they are more than twice as often divorced or separated living as male borrowers.

Methodology

All installment loans that were applied for and concluded via verivox in 2019 were included in the evaluation.