Recent studies have shown that peoples usually decide to take loans or credits when their life situation forces them to do so. However, if expenses are urgent, they are more likely to choose a non-bank company, and when it is important for them to extend the repayment period, they decide to use the bank’s offer.
Advertised offers with a low interest rate or 0% commission may suggest that by deciding on such a proposal we can count on a free loan. In fact, unfortunately, this is not the case at all, because we have to pay back interest accrued on an annual basis, but also to cover additional costs, such as a commission for issuing a positive credit decision or a preparation fee or relatively expensive insurance. Banks often offer various types of insurance for promotional loans, although it is not always mandatory. The nominal interest rate will not be a reliable indicator of the total cost of the loan.
Therefore, it is necessary to take into account the APRC, i.e. the Real Annual Interest Rate, taking into account all the costs of the loan – what is important, the proposals must be for the same repayment period and the same amount to be able to compare reliably.
Many customers find that non-bank loans are unprofitable due to the high costs. And although there are offers with very high APRC, you can also find beneficial offers. Of course, also in this case you have to take into account additional fees including the preparation fee, administrative fee or verification fee. The latter, however, is usually a low amount of USD 1.
Under the so-called Anti-usury Act, both lending companies and the bank may charge costs up to a predetermined amount. Therefore, non-interest costs may not amount to more than 25% of the capital and not more than 30% per annum. Of course, it is worth comparing different offers and checking which of the institutions can offer us a more favorable loan.
Special calculators placed on thematic websites that calculate the total cost of the commitment and fixed installments based on the information entered will also help. Of course, that’s not all – even if we decide on a specific offer, we should read the terms of the contract in detail, and sign the document only if its content is fully understood by us. If you take out a non-bank loan, it will also be wise to verify the company that you want to use. Relevant information can be found on the website of the Financial Supervision Authority.
Many people decide on the next loan, although they are already paying off other liabilities, and often it is a way to cover installments from previous loans. Such behavior often creates a vicious circle, where we get into debt more and more and we gradually deteriorate our financial situation. So it’s best to use common sense. Of course, there are situations when using a quick injection of cash will be a good solution – it may be a limited time promotion for training courses or a language camp for a child. This type of expenses is a kind of investment in yourself. However, if you can not afford the latest TV model or a luxury holiday abroad, it may be better to give them up and collect the appropriate amount in advance to finance them.
The choice largely depends on our individual needs and expectations. Because to obtain a non-bank loan it is often enough to have a clean credit account, a valid ID card and a personal account, choosing this solution may be beneficial for those who need cash immediately. However, if you plan to borrow a higher amount than several thousand for a period longer than three years and you can wait a little bit for borrowed funds – it is worth looking for the appropriate offer in the bank.