Study all its conditions and calculate your financial capabilities in advance. Independently monitor the websites of several credit institutions (banks and microfinance organizations) and analyze their offers. Having chosen the best option for yourself, check with a manager all the terms of the loan: the loan amount, terms and amounts of payments, whether there are any fees when receiving a loan or early repayment, what the full cost of the loan will be with all interest and payments, how much the overpayment will be and other important questions.
A potential borrower needs to know that before concluding a loan agreement, the credit institution is obliged to provide full consultation to the client on all issues that have arisen, as well as information about the term of the loan; types of interest rates: fixed or floating, calculation procedure if the interest rate is floating; the amount of the annual effective interest rate (real value) on the date of the client’s application. The annual effective interest rate is the total amount of all payments paid by the borrower under the loan agreement.
Also consider the loan repayment methods: differentiated and annuity. The first involves unequal monthly payments, which reduce proportionally over the loan term. That is, repayment of debt on a bank loan is carried out in decreasing payments, including equal amounts of payments on the principal debt and interest accrued for the period on the balance of the principal debt. In the second case, we are talking about equal monthly payments stretched over the entire loan term. Debt repayment is carried out in equal payments throughout the entire term of the loan, including increasing payments on the principal debt and decreasing payments on the interest accrued for the period on the balance of the principal debt.
People should realize that if they do not study the contract terms well, neglect to fulfill their credit obligations and overestimate their solvency, it may negatively affect their credit file. Choosing a loan requires responsibility, discipline and the right approach of the borrower.
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