You have decided to apply for a loan but are not sure how the whole process works? Don’t know if the interest rate and monthly annuity repayments are the only items you should pay attention to when taking out a loan?
Below are some helpful questions you should ask your client advisor at the credit institution where you plan to take out a loan. The decision to take a loan is important , so it is imperative that you be fully informed when it is made.
How much money can be borrowed from your credit institution?
When lending money, banks assess the risk, more accurately checking whether you are able to settle your obligations on time. The most commonly considered factors are your credit rating, employment status, and the relationship between your current earnings and your debt. Since each credit institution has its own valuation methods, it is a good idea to know what your realistic options are to borrow, especially if you are buying a home.
Of course, our suggestion is not that you should go to the absolute maximum credit limit. Calculating the maximum allowed is not an indicator of how much you really owe, but an indicator of the limit you should not go over.
Can you give me a credit calculation with all the charges charged?
The effective interest rate calculation simplifies the comparison of credit conditions between financial institutions.
It is very important to ask this question, because in addition to the advertised nominal interest rate, the ultimate effective interest rate, which contains all the accompanying costs, is what gives you the best idea of the terms of the loan arrangement you are entering. Therefore, the calculated effective interest rate simplifies the comparison of credit terms between financial institutions.
Is it necessary to secure participation when taking out a loan?
When granting special purpose loans, financial institutions sometimes ask you to provide a certain percentage of participation from your own sources.
If you are able to secure a certain percentage of your total purchases from your own sources, you can reduce the loan repayment period or the monthly repayment annuity.
Are there any other costs I should know about?
There are some aspects of taking out loans that can be overlooked at first, which can be very important. For example, you do not have to count on the cost of evaluating a property when taking out a home loan – it is free . The more information you have about all the related costs you collect in advance, the more prepared you will be to make an informed, informed financial decision .
Ask your advisor to give you all the details in advance of the costs associated with taking out a loan, as well as the cost of early closing, if you decide to refinance your loan due to better market conditions. We talked about this in the text “Refinancing liabilities – with little attention to great savings”.
We hope that these tips will prepare you to apply more wisely and successfully for a loan. If you are interested, you can find bank’s loan offer here, and arrange with our customer advisers at the branch nearest you.