The volume of contracted loans over the Internet is growing every year, despite the tightening and clearing of the consumer credit market, which has been under the direct supervision of the National Bank for some time. The offer of bank and non-bank loans remains very varied, television, print and internet are full of advertisements for these products.
The average consumer – although now better protected by legislation – must remain vigilant. We have therefore written 5 good recommendations to follow if you are going to borrow money.
The first bid is not the most advantageous
Don’t be tempted by the first ad you see. Browse the websites of other banks or non-banking companies to compare multiple offers. You will most likely find another loan on even better terms. For bank loans, it is often true that the bank’s creditworthy clients can get better interest and pay back in time. If you don’t have time to compare, use separate loan comparators, such as Quality Loan. A few minutes of the time you put in the comparison can save you thousands of crowns in total costs.
Interest and APRC are not the same
Comparing multiple offers is crucial, but comparing them is important. Not everyone knows that interest and APRC are different terms. In advertisements you often encounter the term interest (“interest from …%”), this is obviously more advantageous for the provider, because the interest is usually lower than the total APR. But the APR is the main parameter you should monitor.
Indeed, it contains all the costs associated with the loan, with interest being only one of those items (adjusted, for example, for fees and payment for the provision). So the next time you see an ad for a “interest rate” loan, you’ll know that the main one is written in a slightly smaller font somewhere else.
Treacherous links “from” and “to”
We will forgive you up to 15 installments. We will refund up to 25% of your interest. Monthly payment from 1290 USD. These are all real examples from the offers of banks and non-banking companies that you can commonly encounter. Is this a misleading ad? Not acting.
These bonuses really can get and are valid, but it is usually necessary to fulfill a number of other conditions – flawless repayment throughout, combining high lending and long maturity etc. Focus on the details for which are advertised bonuses and benefits in force, is not always in fact, it must be specific to your case.
Keep track of your income and expenses
Both large and small loans mean additional cost to your budget. A quick loan is usually repaid within 30 days, so you should be able to repay it from your next payday. However, a long-term loan will “live” with you much longer, often several years. You will have to repay it every month.
Knowing your monthly income and expenses in advance is therefore key to rationally assess whether you can afford the loan and whether you will have to repay not only this month, but also for the next 2 years. If possible, try in the months when you do not spend so much to put some money to the side , they may come in handy in the event of an unexpected financial outage during repayment.
Sign only what you understand
Key advice at the end. Any contract that obliges you to pay back is a burden and a considerable obligation. Therefore, carefully read all draft contracts that you receive from a bank or non-bank company and do not sign anything that you do not understand or are unsure about.
Pay particular attention to the possibility of early repayment of the loan and the amount of penalties in case of late repayment. The contract as such should always be concise, clear and understandable to consumers (but of course the reality is often slightly different).