Today there is a huge number of loan offers not only from banks, but also from other financial organizations. How not to get confused in all the variety of promises, guarantees and advertisements and choose the best conditions for yourself is not an easy question and requires careful consideration.
If you intend to take out a bank loan, you should not immediately agree to proposals for a minimum interest rate. There are many important aspects to consider when choosing a bank for lending. Pay attention to the reputation of the financial institution. And in order to choose a truly reliable partner, you need to know some of the nuances of lending.
How not to fall for deception?
First of all, clarify all the conditions of the future loan - from the list of required documents to the repayment schedule of the proposed loan. Be sure to ask about additional fees, insurance and other payments. To attract clients, many banks lower the interest rate, but at the same time add various commissions. It's good if the commission turns out to be one-time, but there are monthly additional commissions, which are often silent. All this is absolutely legal, because when making a credit deal, you will be asked to sign not only a loan agreement and a repayment schedule, but also various notifications. Usually, to understand them, it takes a lot of time, so often the client signs them without reading. And after signing, you will not prove anything. To avoid this, when you first contact the bank, ask for a standard loan agreement and a notice of the total cost of the loan. Absolutely all loan payments must be indicated there.
The repayment schedule is an important aspect
How to choose a loan repayment schedule is up to everyone personally. However, if you know the pitfalls, it will be easier to decide on the choice of a loan that is right for you. Today there are two main types of loan repayment schedules. In the first case, you will be asked to pay the amount in equal installments, that is, every month the amount will be the same. Such a schedule is called annuity and is quite convenient, especially for borrowers with a small monthly income. There is also a minus of such a scheme. Each payment combines the amount of a part of the principal and interest. And if you look in more detail - the first payments consist of more of the interest payment than the principal. Without going into banking details, we can say that by the middle of the loan term, the borrower pays more interest than the "body" of the loan. Typically, the cumulative overpayment in this case is much higher than the overpayment under the standard (classic) schedule.
The classic repayment schedule is more loyal in the sense of paying interest "after the fact" on the remaining debt. The point is that the loan debt is divided in equal parts for the entire loan period, and the interest is calculated according to the classical scheme. Such a scheme is convenient for partial and full early repayment, but it has a certain financial burden in the first third of the loan term.
