When lending to many people, the question arises: “Where can I find a loan with a low interest rate?” After all, nobody wants to pay too much. When choosing a bank and loan program, there are a few nuances to consider.
The interest rate itself does not provide comprehensive information about the total cost of the loan, as advertising will most likely not reveal all commissions, insurance, and other payments.
Cash credit, on a bank card, goods on credit
The dilemma for the borrower. Interest depends on the choice of loan program. The most expensive type of loan is a cash advance. In this case, the low interest rate is offset by additional fees. Another thing – the goods on credit. This is the cheapest form of consumer credit, because in this case the bank takes the goods as a pledge. A credit card is also a pretty interesting product. In most cases, the bank allows you to use preferential loan funds for a specific period (30-50 days). This is an opportunity to save interest.
When you need a significant amount of money for consumer needs, it is sometimes easier to use a product such as a real estate secured consumer loan. 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 the usual “pitfalls” for borrowers.
Hidden commission in the form of credit insurance
Such insurance is a sale of additional banking products rather than a necessity. Finally, the borrower is fundamentally insured against an accident and not against the non-return of funds.
Monthly fee for credit management
Even if the interest rate is attractive enough – don’t hurry. Consult the manager about commissions. Typically, banks offering a low interest rate loan ensure the profitability of the organization at the expense of a monthly commission. The amount of such a commission varies between one and two and a half percent of the original loan amount and is paid monthly.
This type of commission is usually used only when a cash loan is issued. The cost of the fee depends on the terms of the loan and is measured as a percentage of the loan amount. You can also find a fee for withdrawing funds from the cash register or an ATM.
Sometimes products can be found in bank loans early repayment of the loan. This increases its cost to the borrower, and in this case a loan with a low interest rate proves to be much more expensive than a similar one in another bank with a higher interest rate.
So we focused on those moments that significantly affect the decision to get consumer credit. This makes it possible to calculate all the costs, advantages and disadvantages of processing a loan for a particular program and really get a loan with a low interest rate, and not a huge bag of overpayments.