Before you decide to take a personal loan, carefully consider the importance of the need that you want to finance in this way.
Rashly and inconsiderate decision for borrowing on the long term can burden your budget.
If you decide to take a loan, keep in mind that banks offer different types of loans, and because of this you need to make good research before you decide which loan best suits to your needs.
Before you submit your personal loan application, you must check the following information:
1. What is the effective interest rate?
2. Which fees are included in the calculation of the effective interest rate, except for the nominal interest rate?
3. Does nominal interest rate is fixed or variable?
4. Does the bank calculates compound interest and what is the percentage?
5. The total amount of interest and fees that you will pay to the bank
6. Whether it is and in what currency is loan indexed?
7. What exchange rates are used by the bank due granting the loan, and what exchange rates during the return of the loan or annuity payment (rate)?
8. What assets (mortgage, pledge…) are needed to provide for the loan?
9. What are the fees for the grant of the necessary documents required by the bank, such as the cost: estimates of real estate and personal property, insurance premiums or other charges in connection with a collateral loan, obtain land certificates, certificates, permits and decisions of the competent authorities, the Credit Bureau and others.
10. The credit is given with participation or deposit?
11. Does the Bank reserves the right to make changes to certain conditions of the loan regardless of the will of the client, what conditions can change, and in what situations?
12. Whether the agreement provides early repayment or reduction of principal and what are the conditions in these cases (when it can be done, does the regular interest rate is recalculated due to changes in the repayment period and what percentage of the fee charged for early repayment or settlement of the remaining debt?)
How to decide which loan is best?
The easiest way to compare the different conditions under which banks offer loans and decide which suits to your needs is to compare the effective interest rate.
The lower effective rate of interest per annum, the loan is cheaper (only if compared borrowing in the same currency).
The amount of the annuity (rate) for loans with different repayment periods is not a true indication of the cost of credit.
Loan with a longer repayment period can lower your monthly payments, but that does not mean that the total liability for this loan is lower.
When comparing the terms from different banks, compare the cost of the products included in the package regardless of whether you need (for example credit cards), which are not included in the effective interest rate.
Good To Know
What is the grace period and whether or not to use?
Grace period is the period during which credit is made available to the user, but repayment of loan is not started. If you use the grace period, it is necessary to inform you that at this period you will pay or not interest.
What does the indexation of loans means?
Loan indexation presents binding of the obligations of loan with changes in the retail prices or exchange rate of a foreign currency.
