How much does the loan really cost
The company may also impose a preparation fee for processing your loan application.
This is the cost for preparing documents and analyzing creditworthiness. The amount of the fee depends on the loan amount and in the event of resignation or early repayment, the money will not be returned to you.
Also make sure in advance if additional fees
Are required for visits by the lender’s representative from your home, e.g. to pay and return the loan or installments at home. Most often, the additional cost that should be considered when taking out a loan is insurance. Depending on the lender, these are life insurance in the event of permanent incapacity for work or loss of job. Often this is only an optional cost, but there are loan offers where it is mandatory to take out insurance.
Such a fee increases the monthly installment by the amount of the insurance premium, the sum insured (the maximum amount of compensation is usually low compared to insurance offers not related to the loan, and the payment of compensation must be asked to the lender who for factual reasons is not in the interest of applying for payment of insurance to the insurer).
However, credit insurance has good points for you. This is not only a lender security that can lower the loan interest rate but also protection for you and your family due to unforeseen events that may make repayment impossible.
Are you behind with installments?
Another fee on which the lender earns is the costs of extending the payback period . If for some reason you will not be able to pay the liabilities for the agreed time, you can extend the repayment period.
You will then be charged a fee, which may amount to several dozen percent of the total amount of the liability. This is the basic instrument of earning by payday companies that is used by them to drive customers into a spiral of debt. You can read how to avoid such fees in the article A few tips that will allow you to pay back payday loans.
Additional fees are often written in small print on contracts, leaflets or website. When borrowing, pay attention not only to the additional costs, but also to their amount.
Checking the offers of various companies
Compare all additional costs and check the total amount you will have to pay back by choosing a given offer. If certain provisions in the contract are unclear to you, consult them with a specialist before signing. Low interest rates are often just a cover for hidden fees that allow the lender to make extra profit.
To provide customers with the opportunity to immediately know the cost of the loan, on the basis of the Act of May 12, 2011 on consumer credit, every professional lender is required to present to the client before concluding a contract called consumer credit information form, which is assumed by the legislator to clearly display the cost of the loan by providing the APRC or Real Annual Interest Rate, i.e. the value of the total cost of the loan (all fees, costs and interest) on an annual basis.
The APRC value is often several hundred or even several thousand on an annual basis. A loan with such APRC is certainly an expensive product and we strongly advise against buying it. However, it is a common practice not to include additional fees in the APRC , e.g. for servicing a loan at home, commission for extending the repayment period, etc., therefore you should ask the lender or APRC employees in the offer presented to us certainly also includes additional costs. If the customer misleads us in this respect, such action may constitute grounds for evading the legal consequences of concluding the contract with reference to error.