Today the offer of bank and financial loans is increasingly wide: but how to choose the best personal loan among the various proposals?
If you want to get an advantageous loan and minimize the cost of your financing, consider the APR. The APR, formed by the TAN and ancillary expenses, summarizes the real cost of a loan in percentage terms and allows you to immediately understand the convenience of the loan: the lower the APR, the cheaper the loan installment will be.
How much does the APR affect the total cost of funding?
By applying for a $ 10,000 loan with a fixed TAN of 6.39% and an APR of 6.58%, the refund will be $ 195.20 per month for 5 years, for a total of $ 11,712. For a loan from the same amount and duration with a TAN of 8.72% and an APR of 9.66%, the monthly payment will be $ 206.23 and the total amount due by the customer of $ 12,526. A loan with a lower TAN, for example of 7.50%, but with a higher APR, for example of 10.13%, will raise the monthly installment to $ 207.39 and the total due by the customer to 12.650 $, almost $ 1,000 more than the first solution and $ 124 compared to the second, despite having a smaller TAN than the latter.
Check the cost of the insurance: It is not always mandatory
Always remember to check if there are insurance coverage to be taken out when signing the contract. Depending on the type of financial insurance policies are offered in different ways: the subscription can be mandatory or optional . Insurance coverage is a cost that undoubtedly affects the value of the installment, but we advise you to evaluate the insurance as an opportunity to return the installments with complete peace of mind.
The insurance serves to protect you from the risk of insolvency, allowing you to support the economic commitment made even in the event of negative events (serious illnesses, permanent accidents, death and / or sudden unemployment). Thanks to the insurance coverage, the company takes charge of the installments in the event that you are unable to return the loan amount.
Loan insurance is mandatory in case of loan with assignment of the fifth ; in other cases it is usually optional, even if the bank or financial company may request it as an essential condition for disbursing the loan even when very large amounts are requested or when the debtor is considered a subject “at risk” (he was a bad payer or not has a fixed monthly income).
A small additional outlay protects against possible risks and proves to be particularly useful in times of economic instability, especially when applying for large amounts of financing, so it is important to carefully evaluate your personal situation before making any choice.
Report your guarantor: The request will be accepted with more probability
In addition to the ability to repay installments, there is another factor that increases your chance of having your request accepted: the presence of a guarantor . The guarantor puts his signature on the loan agreement as guarantor. Its responsibility is to ensure the regular payment of the installments in the event that you can no longer meet the economic commitment made.
Banks and financial companies are increasingly careful to limit a possible risk of insolvency on the part of the applicant. The guarantor represents an additional security for the bank which, in this way, ensures the repayment of the installments in the manner and within the time established in the loan contract.
The presence of the guarantor is not always a necessary requirement for granting the loan, but a condition that helps make you an ideal customer.
Extend the duration to reduce the installment: you will get a loan easily
When you apply for a loan, try to distribute the weight of the installments over several years: in this way you will get a cheaper installment value and increase the possibility of seeing your request accepted.
Keep in mind that, for banks and financial institutions, one of the fundamental conditions for granting the loan is the ability to support the economic commitment entered into. The finance company assesses your repayment ability by examining the ratio between installment and perceived income and checking that this does not exceed 30% of the total income.