How do you compare loans?
How to properly determine the attractiveness of individual loan offers? On the basis of what factor should we be able to quickly assess that an offer is attractive and why? Unfortunately, as the results of opinion polls show, it is not the best in Poland with economic education. That is why we decided to present some issues in a more accessible way. We invite you to read.
What do these abbreviations mean and how to interpret them?
In the case of loans and cash loans, we deal with some of the most important parameters of the offer. These are primarily:
- Commission rate
- Nominal interest rate
- The cost of insurance protection
- The need to use additional products or services, thanks to which we can obtain a loan or credit on certain, more attractive terms
- Actual Annual Interest Rate (APRC)
- Total amount to be paid by the borrower (CKZ) and total cost of the loan (CKK).
We will briefly present the characteristics of the elements of loan offers.
Who asks not stray!
It would seem that in the 21st century nothing can surprise us anymore. And yet reality still shows how dynamically changing times we have lived. Who else twenty years ago would have thought about which loan is better? If funds were needed and the banks looked at us favorably, then we could choose between one and the other “only the right” model.
Fortunately, these times are irrevocably gone and we can focus on the merits, i.e. go back to explaining how the parameters listed above translate into the conditions on which we will receive and pay back the loan:
- Commission for granting a loan – if the repayment period is quite long, its impact on the amount of credit costs is smaller – due to the fact that they will be spread over time. It is different from a short loan period – the commission, in this case, will significantly increase the price of the loan. The market median is around 3% today.
- Nominal interest rate – the amount of interest we pay will depend on it. Today’s market average is around 15%. The maximum level of interest, in accordance with the so-called The anti-usury act may not exceed 16% per annum.
- The cost of insurance protection. There is nothing for free – so if we want to be sure that in the event of unforeseen random events or even death, our loved ones will receive a benefit that will allow you to settle your debt. The premium for the policy is usually presented as the product of the repayment period and the contract amount. We are on the market on a monthly basis in the market median.
The need to take advantage of additional products and services, thanks to which we can receive a loan on specific, more attractive terms. Often, to take advantage of the promotion, you need to set up an appropriate package with a personal account, purchase a credit card or allocate the funds obtained to pay off other loans. You should check in advance whether the bank charges a ROR or card fee. It is also worth checking the costs of insurance coverage.
APRC – is a value that, in percentage terms, determines the level of all components of the loan price in relation to the amount available to the bank. The market average fluctuates around twenty percent.
Their genesis is clear and results from the requirements introduced by the legislator in the Consumer Credit Act. CKK consists of commission, insurance, interest and the cost of any other paid products or services. CKZ is the total value that we will pay, as in the case of CKK, along with the amount available to the customer.
Or maybe it’s better to take a loan quickly and without formalities
We will obtain a specific loan offer as a potential borrower only at the outlet. This is a significant drawback, as it makes it virtually impossible to compare a larger number of bank proposals. And the fact that the differences between individual bank offers can be drastic is best demonstrated by the monthly cash loan rankings published by Good Finance.
However, the question remains whether the average so-called is the bread eater aware that a loan with a 9% commission without interest is the same as a loan with a 16% interest rate without commission? Depending on how long we intend to pay back our commitment, the more attention we should pay to individual elements of the offers. The longer the repayment period, the more important interest and insurance are.
However, in the case of shorter repayment periods, the largest costs are generated by the commission. As you can see, there is a lot of combinations and you can get a real headache from all this … However, there is nothing to break your hands with. After all, you can always check the installments and compare the credit parameters in online comparison websites. Just a few clicks to get the results we are interested in.