I Want to Take a Loan. Which to Choose?admin
Whatever the situation, because of which you decide to use borrowed funds, you need to remember: if you decide to borrow, you must be sure that you can return it. The choice of a specific type of loan or loan depends on what you are going to spend money on and how much you need for this. It depends on the purpose which loan conditions are suitable for you. The term in which you repay the loan depends on the amount you need and how much you can pay per month. All these parameters determine the choice.
Loan or loan?
Lending principles – payment, repayment and urgency. This means that for the use of borrowed funds you always need to pay (as a rule, a certain percentage), and the debt must not only be repaid, but also done exactly on the agreed date. Moreover, there are a lot of options for loans and borrowings, depending on the terms, conditions and requirements of the borrower.
To begin with, we will understand the differences between a loan and a loan.
The more convenience for the borrower – in terms or requirements – the higher the risk for the lender and, consequently, the higher the cost of the loan or loan. Therefore, for each specific situation there is a solution.
Target or inappropriate loan?
Large-scale goals require more money, which means it will take longer to repay the loan. In addition, it depends on whether you disclose the purpose of the loan to the bank or not, what conditions the bank will offer you.
Long-term loan repay more than five years. As a rule, they take it with a clearly formulated goal – to buy land, a car or housing. For this, there are special types of loans, such as mortgage and car loans. They have their own characteristics related to insurance, collateral, requirements for borrowers. But at the same time, such loans are more profitable than inappropriate consumer loans.
An inappropriate loan is issued for any purpose, that is, you can not report on your expenses to the lender. But the interest rate on such a loan is likely to be higher than that of the target.
For planned large expenses, such as treatment, repair or honeymoon of your dreams, a consumer loan, which is usually issued for an average term, is suitable.
For small expenses, a credit card is suitable, unless, of course, you get it in advance, or a microloan, if you have an acute shortage of not only money but also time.
Also, do not forget about express loans, which are often offered for a specific purchase directly in the store – for example, a washing machine in the salon of household appliances. Such loans have their advantages: they are issued on the spot, very quickly, with a minimum of documents, but the interest on them is higher than on a regular consumer loan.
With or without warranty?
The more evidence the creditor has that you are a reliable customer, the more willing it will be to lend you. Here a good credit history, documents confirming solvency, a pledge or a guarantee can be used.
A pledge is your property, money or valuables that you guarantee to give to the bank if you do not repay the loan. If you take a mortgage or car loan, the real estate or the car itself becomes a guarantee.
A guarantee is an obligation that your friend or relative makes to a creditor. This person signs a contract that ensures that you repay the loan or loan. If you cannot do this, the lender will force your surety to pay.
A co – borrower is a person who takes a loan or loan with you. As a rule, a close relative. He is also responsible for paying off the debt. Usually, co-borrowers are attracted when it comes to a large amount, and the income of one person is not enough to pay such a loan.
A loan with a pledge or guarantee is called secured . The co-borrower is another guarantee for the lender that you will return the money.
Unsecured loans are issued without collateral and surety. This is a risk for lenders, so usually such loans are issued at a higher interest rate than for secured loans. But there are exceptions: for example, banks often offer preferential rates for salary clients (those who receive salaries on the card of this bank).
How will you repay a loan?
You can repay a loan or a loan in different ways, gradually or at one time. There are two ways to gradually pay off:
Differentiated Payments. The main loan amount is divided into equal parts, and interest payments are reduced every month. In the first month you will pay the largest payment, and in the last month the smallest.
Annuity payments. Throughout the time, the size of the monthly payment will not change. With annuity payments, it is more convenient to plan your budget. However, due to a fixed payment, you will most likely end up paying the bank more than with a differentiated payment.
You can repay the loan and a lump sum payment, which is typical for short-term loans . This allows you to postpone the repayment of a loan or loan and payment of interest until the end of the term under the contract, but requires the borrower to have the full amount to this date. It’s worth taking such a loan only if you know for sure: by the time it comes time to repay it, you will have the right amount.
It happens that you fully repay the amount you borrowed at the end of the deadline, but at the same time you pay interest every month. Minimum payments confirm the solvency of the borrower, but, as a rule, do not provide repayment sufficient to significantly reduce the debt. This type of repayment is usually characteristic of credit cards .
So which loan to choose?
You have to choose from ready-made loan offers. State how much time you need to pay off the loan, whether you will tell the bank about what you are taking money for, and whether you are ready to draw up a pledge. These are your basic loan requirements.
But exactly how you will pay it – in equal parts or the amount will decrease every month – depends on the conditions of a particular loan.
Before taking a loan, be sure to check whether the lender of your choice has a special permission of the Bank of Russia (license or certificate).
Explore different options when you select the best offer for yourself, do not forget to find out the full cost of the loan with all interest and payments. And carefully read the contracts, there are many important things!
Remember that your debt burden should not exceed 30% of your monthly income, otherwise you risk a lot.
Observing these simple rules, you can successfully use credit products without the risk of falling into a debt hole.