6 tips to make your loan really profitable
Do you plan to take out a loan? Then make sure it is really profitable. What to look for when choosing it and what to watch out for? Here are 6 tips to help you choose the right credit product for you. And in terms of convenience. This is the only way to make sure that you do not step next to choosing your loan.
Focus on the interest rate
This is a good initial indicator of how you can filter out bargains from the bargains. The interest rate is given as a percentage and one important rule applies. The lower it is, the more advantageous the loan is. But beware of two important things. Low interest universally does not mean profitability, because it is only a percentage of how much the provider so-called “hit” the amount. In layman’s terms, this means that it indicates how much the bank or non-banking company will earn from you. In addition, it should be borne in mind that the rate given, for example, in an advertising leaflet may not be the one you get. These are the rates that the so-called ideal client gets. If your creditworthiness is worse than its prototype, interest may rise. Be careful about that.
Also follow the APRC
The second thing to watch is the so-called APRC. This is the annual percentage rate of charge. Even this is given in percentages and this should be as low as possible. An important fact about this rate is not only that it is mandatory to state it, so you can find it very quickly and easily. An important fact is that the rate must include everything that increases the price of the loan. It can be different charges, it can be the amount for insurance as well as the interest itself is included in the rate. Therefore, it is an ideal indicator of the profitability of any loan – that is, except for those with shorter maturities, where it is disproportionately high and is better to use common sense. A typical example is the so-called micro-loans, where the APR is really high due to its calculation. Really, however, thousands of percent more certainly not pay.
What is the APRC and why is it worth paying attention to it?
Set the correct installment amount
Also, how high your repayment will significantly affect the actual profitability of the loan. It should be remembered that the repayment should primarily suit you, not the credit company or the bank. First of all, you need to be clear about how much you can afford to pay back so that it doesn’t put your budget at risk. If the repayment amount exceeds the calculated amount, it is a relatively big problem that will put you in financial distress. However, the opposite situation is also complicated – when you set your installment too low. You will repay the loan for an unnecessarily long period, leading to a significant overpayment of the loan. This is because interest is calculated annually on the outstanding amount, which will still be quite high for small installments. In addition, think of the fact that the loan is a commitment that is good to get rid of as soon as possible and have a so-called clean shield.
Beware of additional products and services
Many lenders may also offer some more to their base product. These are so-called complementary products, which at first glance should look like something that the client needs and cannot do without. The reality, however, is that these are complementary products and services that are not so beneficial and which may unnecessarily increase the loan. What are these specifically? For banks, it may be necessary to open a special credit account where fees associated with its management may appear. In the case of non-banking companies, it is often a diverse repayment insurance to protect the client in unexpected situations. But the fact is that long-term loans are money you give extra. And in a few years it is a large sum of money. If you decide to use an add-on product, you should also check the terms and conditions to make it really useful to you.
Just take what you really need
Before you apply for a loan, it is a good idea to know how much you really need. So be clear about what you want to buy and how much the thing costs. This is important so that you know what specific amount to ask for. Even if banks or non-banking companies offer you more, don’t be convinced of the higher amount. Though it may be tempting to have a larger sum of money available, but remember that interest is calculated on the amount provided. The more it is, the more you will overpay. Apart from that, extra money can also increase your monthly payment if you insist on a certain maturity. This is also good to watch out for. Unfortunately, many people succumb to pressure and eventually nod to the offer of a larger sum of money for which they may find employment, but will pay more than if they insisted.
Check your money provider
In the current credit market, you can operate in three segments. They are banks, they are non-banking companies, and they are also loans from people. Whichever option you choose, it is also a good idea to thoroughly examine the funding provider itself. This is primarily because of the fact that you are not surprised by the different conditions in the contract, possible sanctions, or not quite standard approach. It is appropriate to put mainly on various references, discussions and evaluations. You can ask for acquaintances, but also search the Internet. Only a provider that is well rated is the one who can offer what you are looking for. So the most advantageous loan on the market. The ideal way can be to use various loan comparators, which offer both a list of individual providers in one place, but often bring just the evaluation of individual clients.