When lending to many people, the question arises: “Where to find a low interest rate loan?” After all, no one wants to overpay. When choosing a bank, as well as a loan program, you should pay attention to some nuances.
The interest rate itself does not provide comprehensive information on the total cost of the loan, as the advertising is most likely not reporting all commissions, insurance and other payments.
Money credit, bank credit card, goods on credit – a dilemma for the borrower. Interest depends on the choice of loan program. The most expensive type of loan is cash loan. In this case, the low interest rate will be offset by additional charges. Another thing – goods on credit. This is the cheapest type of consumer credit, because in this case the bank takes the goods as collateral. An interesting product is also a bank card loan. In most cases, the bank allows the use of credit funds on preferential terms for a certain period (30-50 days). This is an opportunity to save interest.
If you need a significant amount of money for consumers, it is sometimes easier to use a product such as consumer credit secured by property. In this case, the lowest interest rate will be. The loan is mainly issued for a long time, which significantly reduces the burden on the borrower.
Consider common “pitfalls” for borrowers.
Hidden commission in the form of credit insurance
Such insurance is a sale of other banking products rather than a necessity. After all, in essence, the debtor is insured against an accident and not a non-refund.
Although the interest rate is sufficient to attract – don’t hurry. Consult the manager about commissions. Banks offering a low interest rate loan usually ensure the organization’s profitability at the expense of a monthly commission. The amount of such commission varies from one to two and a half percent of the original amount of the loan and is paid monthly.
This type of commission is usually used only when issuing a cash loan. The price of the fee depends on the conditions of the loan and is measured as a percentage of the loan amount. You can also pay your credit withdrawal fee through a cashier or ATM.
Sometimes you can find in bank loan products commissions for early repayment of the loan. This increases its costs to the borrower, and in this case it turns out that a low interest rate loan is much more expensive than a similar loan at another higher interest rate bank.
So we have focused on those factors that significantly influence consumer credit decisions. This allows you to calculate all the costs, pros and cons of processing a loan for a particular program and actually get a low interest rate loan rather than a huge baggage overpayment.