How and where to take a loan wisely

Many people do without having to take out any loans. Unfortunately, not everyone can afford to live without the support of the bank. Therefore, basic knowledge about the use of credit products.

Financial intelligence should be taught in schools from an early age

Financial intelligence should be taught in schools from an early age

Then many people would avoid excessive debt and negative entries in Credit Information Bureau or National Debt Register databases.

Therefore, if we use financial instruments such as credit or loan, it is worth following the most important rules, so that the contracted obligation does not become a burdensome problem in the future.

To start with, you need to choose the right type of bank loan considering its purpose. If we are going to buy a car – the cheapest will be a car loan, if a flat or a construction plot, of course, a mortgage will be appropriate.

However, the most popular bank loan is a cash loan, due to the fact that it can be used for virtually anything. This is the solution, unfortunately, the most expensive.

Where is the best place to take a loan?

Where is the best place to take a loan?

To start with, it is worth asking about the offer the bank whose services we have been using for a long time (e.g. it runs our personal account, credit card). We can then count on more favorable one’s conditions such as a lower commission or reduced interest rate. Unfortunately, it is still a big mistake made by Poles to use only the services of a bank whose branch is closest to their place of residence.

In order to take a loan wisely, the amount of the monthly installment should be properly adjusted to our real financial possibilities. This condition must be absolutely fulfilled if we intend to repay the commitment made on time. If the installment turns out to be too high, we can extend the loan period instead of assuming that it will work out somehow.

Another very important issue is the accuracy of the information provided when applying for a loan. And not only those related to the place of employment and the amount of income obtained. Equally important is the information about our fixed costs such as rent, utilities, telephone, car maintenance costs, number of children, etc.

This data is also used by the lender to calculate creditworthiness. If they are incorrect, the bank will misjudge our debt repayment options. This can lead to problems with the timely payment of installments and the bank charging penalty interest.

Before you decide to take a bank loan, you should think about our future, even in the professional sphere. Permanent work today does not mean a reliable source of income in a few years. In addition, let’s predict the expenses ahead of us in the near future. Will we be able to afford them by paying the installment every month?


Housing loans also receive APR

Good news for comparing housing loans. From April 1, 2017, banks are legally required to bundle all costs into one annual cost percentage also on mortgage loans. Currently, the APR scheme only applies to consumer credit. The total costs of installment loans, such as personal loans, car loans and renovation loans, are easy to compare thanks to this APRC formula. And also with money reserves, credit cards and other credit openings you know in advance where you will pay the lowest or highest costs when you go below zero.


What will change with mortgage loans?

mortgage loans

Costs of home loans are not that easy to compare at the moment, because the institutions charge other costs in addition to interest, including file costs, estimation costs, guarantee costs and the costs of compulsory insurance. These are not uniform. For preparing a file alone, the costs at different banks can vary between $ 250 and $ 700. The rate for estimating the value of a home also varies. This means that a loan with a lower interest rate may turn out to be more expensive due to high additional costs. The borrower usually sees the additional costs only after the credit process has already started, or is sometimes not aware of it at all. Bankers are naturally useful in subtly presenting their costs.

As of April of the following year, the banks must include all their costs in the annual percentage rate. In addition to this APR, they may not charge any other costs. When comparing home loans from multiple financiers, in the future the consumer only needs to pay attention to the APR. A loan with a lower APR will automatically result in lower credit costs.


How can notary fees be compared?

home loan

When taking out a new mortgage loan and transferring (refinancing) an existing home loan to another bank, a notary comes into the picture. The government is in consultation with the Federation of the Belgian Notarial Profession to ensure that the notary fees are fully uniform. Now only the fees are bound by fixed percentages by Royal Decree. For the administration costs of a notary there are no mandatory calculation methods for the time being. A bank can offer higher, or lower, notary fees when a mortgage is handled within a total package. The next year the uniform administration rates must be available for notaries. For the consumer, this item may not be a factor when choosing a bank.