Just before Christmas, many of us are struggling with a dilemma, how to finance the dreams of relatives.” The desire to spend time in a family atmosphere at a generously set table makes us start looking for companies that provide quick loans. it kills in us rational thinking. We often make financial commitments that are not covered by the current state of our portfolio. Let’s be aware that the loan does not have to be a problem. There are many helpful credit and loan institutions on the market that will help us finance gifts, Christmas shopping or trips. The main thing is not to lose your head and do not fall into the spiral of debt during the holidays, that is, when our obligations become too heavy. To avoid problems, it’s worth following the few tips below:
Check how much you can borrow
There is nothing simpler. First of all, let’s think about the amount of income we expect in the next months. In a situation where we lack cash, but we expect additional funds, such as an annual bonus, we have nothing to fear. When we make a financial commitment, we know that we will pay its repayment. If we want to take out credits or loans for a longer period, it is worth considering what amount of monthly installments we can repay freely. Remember that we can always contact a specific loan company and ask for advice. Almost every non-bank institution has trained employees to help us assess our financial capacity.
Read loan agreements! You do not understand, do not sign
A contract is a concerted agreement between two or more parties establishing their mutual rights or obligations. If the contract is unclear to us, and some of the provisions seem confusing, suspicious – do not sign such a contract. Let’s choose a company that in its activity is guided by moral values and does not use “legal traps and small print conventions”.
Internet loan costs
Pay attention to costs! Financial and non-banking institutions do not lend money for free. Each contract must contain a precise calculation informing how much it will cost us a loan or a loan. The costs may include:
- Interest rate: this is the income for borrowing depending on the interest rate set between the parties. The interest rate has a maximum value determined by the Civil Code. It is four times the NBP lombard loan rate, which was 2.5% as at March 2015. Thus, the maximum interest rate is 10% of the value of the loan or loan.
- Commission: a form of remuneration for granting a loan. Depending on the institution in which we make the commitment, we pay the commission at the beginning of the contract period – from the consumer’s own funds, or (which is more frequent) by deducting from the loan amount borrowed. On the other hand, in the case of non-banking companies providing payday commissions, the commission is paid at the end of the loan period.
- Preparation fee : often financial institutions impose costs on the client related to the preparation of the contract and the processing of the loan application. If the amount of the fee is in the form of a percentage of the amount borrowed, it is difficult to find their reflection with the actual incurred by the lender.
- Administrative fee: the justification varies depending on the lender. You can treat it as a commission and preparation fee. Its purpose is usually to return the lender costs related to the operation and administration of the loan granted.
- Home service fee: some of the companies introduced the cost of collecting debt from the consumer’s home. This is called additional service consisting in the fact that the representative of the loan company comes to the customer’s home and personally receives the installments (the so-called receiving debt). We always ask for the possibility of giving up service at home, because giving up on it will significantly reduce the costs associated with servicing the loan or credit.
- Registration fee: a popular cost in loans or credits provided on the Internet channel. The fee is one-off and usually symbolic (usually PLN 1 or PLN 1). It is collected at the first loan and serves identification purposes – a comparison of registration data with the information contained in the title of the transfer.
There is no doubt that sometimes it is difficult to precisely determine what the actual cost of a loan or loan is. To facilitate the comparison of various offers, helpful parameters were introduced.
- Total loan amount: the total amount of the loan or credit that the financial company transfers to the customer.
- Total cost of the loan: the sum of all costs that the customer must incur to receive the loan and credit amount requested.
- The total amount to be paid by the consumer is the sum of the total cost of the loan and the total amount of the loan.
- APY: Actual Annual Interest Rate indicating the total cost of the loan. As a result, the client does not have to think and compare the amount of commissions and interest on various offers, and the total cost is expressed in one percentage. The lower it is, the lower the cost of the loan. APY is calculated on an annual basis. The manner of calculating the APRC is precisely specified in Annex 4 to the Act of 12 May 2011 on consumer credit (Journal of Laws of 2011, No. 126, item 715, as amended)
Non-bank loans are a simple and convenient way to finance Christmas shopping. Let’s just remember to keep a little cold blood and rationality while choosing the parameters of the loan. Let’s check what level of burden will not be a threat to our financial liquidity in the coming months.