What should I consider before choosing a loan?
We all have dreams to fulfill, whether it’s remodeling your home, paying for your children’s school, buying a car or buying supplies for your business. Many times, these dreams can be postponed dangerously if we only use savings as the only way to finance them.
In these cases, the most immediate solution is to ask for a loan to help us make these projects a reality.
A loan is a financial operation with predetermined validity in which a person or entity grants a fixed amount to the applicant under the commitment that the applicant will cover it within the term agreed by both parties.
Take the following factors into account before applying for your loan.
The interest rate is an amount paid to the amount of a credit according to a specific term. It is the cost of money granted to the debtor. It is an approximate of the total cost of your loan.
Identify the interest rate is fixed, variable or mixed. This means that the amount can remain the same for the entire period of time you chose to pay off your debt or it may change upwards over the months.
Set the time during which you can pay. Short-term credit is understood as one that has a duration of one year or less, directly influencing the interest rate. The longer you take to pay off your debt (term), the higher the interest rate.
This is the cost of the loan you have acquired. It is a percentage measure that integrates annual fees, interest rates, commissions and insurance that adhere to the amount granted to you. Consider the annual interest rate that exists at the beginning and at the end of your term to estimate the total cost of the service.
Many loans charge commissions for the provision of service. Advice, customer service, among others.
It is important that you inform yourself about the commissions, if they exist in the service you are about to hire, since some entities do not charge any commission or handling and this reduces the cost of your credit.
These are the guidelines established by the agency that made the loan. Each institution has its own rules, some have an impact on the total cost of the service and others have no significant impact.
Find out if there are forced times or if there are penalties for prepayment to estimate the final cost.
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