A low interest rate on a cash loan encourages you to complete the application at the bank. It is worth to know the definitions of basic parameters and check the most favorable loan offers.
Interest on the loan and bank’s margin
When browsing the offers of banks, we often come across concepts whose definition is not entirely clear to us. Thus, it is worth knowing that the profit margin of the bank is from the loan granted, and many factors affect it, such as the amount of our obligations, our credibility in the eyes of the bank and our activity in the field of cooperation with the bank, eg using a bank account or owning credit card. The interest rate, on the other hand, is interest that we give back to the bank in exchange for granting us a loan. Currently, we deal with low interest rates, thanks to which banks offer cash loans with an interest rate of 4.99%, 6.9% to 11.99% . So, deciding to borrow PLN 1000 a year in the bank, our monthly installment will be around PLN 100. This is a very good time to take a cash loan, because until recently interest rates in banks have been balancing between 14% and 18%.
Monthly installments with cash loans
The liability can be divided into equal or decreasing installments. In fact, regardless of what form we choose, we will always pay the same amount of capital. The difference is due to the amount of interest in installments. In the selection of equal installments, the first installments repaid by us mainly consist of interest rates and, to a lesser extent, capital. However, in the selection of decreasing installments, the amount of capital in each installment is immutable, only the amount of interest is reduced.
Cash loans with insurance
Depending on the bank’s policy, we can choose an insured loan or not. Most banks are already announcing that consumers who decide to take out a loan have a better chance of getting a positive decision. We should always read the insurance terms. Let us remember that the insurer will never ask itself the initiative of taking over the repayment of our obligation, so when paying for the service, we should know what we receive in return.
In some cases, the solution to our financial problems may be a consolidation loan. This is a type of cash loan intended to repay existing obligations – often very different. Consolidation of loans is a great convenience – thanks to this solution, we can pay off not a few installments, but one. It is assumed that the installment of the consolidation loan should be lower than the sum of the previous installments, while it often means an extension of the loan period. It should also be noted that after granting the loan, the money does not go to the borrower’s account, but it is immediately allocated for the repayment of previous liabilities.
A consolidation loan can simplify the repayment of many installments. After the payment is settled, some amount of surplus may remain. Then it is paid into the borrower’s account. When applying for a consolidation loan, we will have to document the amount of loans and credits to be consolidated.
The possibility of early repayment of the loan and the amount of monthly installments
Before we decide to make any commitment, we should first consider what amount of installment will not be an obstacle to our household budget. Specialists advise that it is better to spread the liability for a longer period of time, with slightly smaller installments, so as not to fall into a spiral of debts. It is worth finding out what are the conditions for early repayment of the obligation at the bank, whose services we want to use. In some banks, the total cost of the loan may be reduced, while others do not change the previous costs, and therefore the early repayment does not give us anything but peace of mind.
The total cost of the loan and the duration of the contract
Remember that when comparing offers from other banks, we should pay special attention to the total cost of the loan. The amount of commission, interest rate, insurance costs, all these fees are included in the total cost of the loan. Sometimes we decide on a loan in exceptional situations when we urgently need additional funds. Banking procedures involve many documents and internal verification of our credit history. Currently, many banks on the market offer an accelerated procedure for consumers who already use bank services, eg those with an account. After all, we should find out in what period of time from signing the contract the funds will be on our cat.
Remember that always the basic thing about financial matters is to read carefully the terms offered by the other party. The contract should be made available to us in a legible form. We do not have to sign it right away, let’s take the opportunity to get to know it in peace.