We live in a time when the only chance to buy certain goods is to take a loan. Regardless of whether we are a natural person or an entrepreneur, we have to go to the bank to finance our purchases. It is worth, however, especially in situations when we try to get a loan for high amounts, it is good to search the market. We currently have many banks, which means we can choose offers. However, to choose the best or the cheapest, we need to know what the loan costs are and what to look for to determine which loan is the cheapest.
APRC, or the actual annual interest rate, is an indicator expressed as a percentage of the year. Each bank is required to indicate its APRC indicator to its clients. Why is this happening? With the help of APRC we are able to choose the cheapest from several loans, even if we don’t know much about things. As a rule, the lower the APRC, the cheaper the loan. This indicator is based on all loan costs.
What are the loan costs?
This is the amount that the borrower receives from the bank under the loan agreement. This is the basic cost of credit, but not the only one. As a seller, the bank wants to make money by selling its product.
Interest on loan
Interest is also charged on the loan capital. The upper limit is set by the legislator. The interest rate is set by the bank on an annual basis. We can choose fixed interest rate throughout the loan period or decreasing interest rate.
As we said, the bank wants to earn on selling its products. For this reason, the costs of the loan also include a commission for the bank for granting the loan. Insofar as the bank cannot exceed the agreed interest rate, it is completely free to adjust the amount of the commission. Therefore, each cost separately does not prejudge the total cost of the loan. Bani offering loans at zero interest most often inflate the amount of the commission. As a consequence, it turns out that a loan with an interest rate of 0% is more expensive than a loan with an interest rate of 8%. Therefore, the most important thing is to look at the loan and all loan costs together, i.e. the APRC indicator.
Additional loan costs
They usually depend on the amount and type of loan. Most often we meet with such loan costs as insurance, notary fee, costs of entry into the land and mortgage register, establishment of a mortgage for the bank, etc.