Borrow with your head. The cost of a non-bank loan

Just before Christmas, many of us are struggling with a dilemma, how to finance the dreams of relatives.” The desire to spend time in a family atmosphere at a generously set table makes us start looking for companies that provide quick loans. it kills in us rational thinking. We often make financial commitments that are not covered by the current state of our portfolio. Let’s be aware that the loan does not have to be a problem. There are many helpful credit and loan institutions on the market that will help us finance gifts, Christmas shopping or trips. The main thing is not to lose your head and do not fall into the spiral of debt during the holidays, that is, when our obligations become too heavy. To avoid problems, it’s worth following the few tips below:

Check how much you can borrow

Check how much you can borrow

There is nothing simpler. First of all, let’s think about the amount of income we expect in the next months. In a situation where we lack cash, but we expect additional funds, such as an annual bonus, we have nothing to fear. When we make a financial commitment, we know that we will pay its repayment. If we want to take out credits or loans for a longer period, it is worth considering what amount of monthly installments we can repay freely. Remember that we can always contact a specific loan company and ask for advice. Almost every non-bank institution has trained employees to help us assess our financial capacity.

Read loan agreements! You do not understand, do not sign

Read loan agreements! You do not understand, do not sign

A contract is a concerted agreement between two or more parties establishing their mutual rights or obligations. If the contract is unclear to us, and some of the provisions seem confusing, suspicious – do not sign such a contract. Let’s choose a company that in its activity is guided by moral values ​​and does not use “legal traps and small print conventions”.

Internet loan costs

Internet loan costs

Pay attention to costs! Financial and non-banking institutions do not lend money for free. Each contract must contain a precise calculation informing how much it will cost us a loan or a loan. The costs may include:

  • Interest rate: this is the income for borrowing depending on the interest rate set between the parties. The interest rate has a maximum value determined by the Civil Code. It is four times the NBP lombard loan rate, which was 2.5% as at March 2015. Thus, the maximum interest rate is 10% of the value of the loan or loan.
  • Commission: a form of remuneration for granting a loan. Depending on the institution in which we make the commitment, we pay the commission at the beginning of the contract period – from the consumer’s own funds, or (which is more frequent) by deducting from the loan amount borrowed. On the other hand, in the case of non-banking companies providing payday commissions, the commission is paid at the end of the loan period.
  • Preparation fee : often financial institutions impose costs on the client related to the preparation of the contract and the processing of the loan application. If the amount of the fee is in the form of a percentage of the amount borrowed, it is difficult to find their reflection with the actual incurred by the lender.
  • Administrative fee: the justification varies depending on the lender. You can treat it as a commission and preparation fee. Its purpose is usually to return the lender costs related to the operation and administration of the loan granted.
  • Home service fee: some of the companies introduced the cost of collecting debt from the consumer’s home. This is called additional service consisting in the fact that the representative of the loan company comes to the customer’s home and personally receives the installments (the so-called receiving debt). We always ask for the possibility of giving up service at home, because giving up on it will significantly reduce the costs associated with servicing the loan or credit.
  • Registration fee: a popular cost in loans or credits provided on the Internet channel. The fee is one-off and usually symbolic (usually PLN 1 or PLN 1). It is collected at the first loan and serves identification purposes – a comparison of registration data with the information contained in the title of the transfer.

There is no doubt that sometimes it is difficult to precisely determine what the actual cost of a loan or loan is. To facilitate the comparison of various offers, helpful parameters were introduced.

  • Total loan amount: the total amount of the loan or credit that the financial company transfers to the customer.
  • Total cost of the loan: the sum of all costs that the customer must incur to receive the loan and credit amount requested.
  • The total amount to be paid by the consumer is the sum of the total cost of the loan and the total amount of the loan.
  • APY: Actual Annual Interest Rate indicating the total cost of the loan. As a result, the client does not have to think and compare the amount of commissions and interest on various offers, and the total cost is expressed in one percentage. The lower it is, the lower the cost of the loan. APY is calculated on an annual basis. The manner of calculating the APRC is precisely specified in Annex 4 to the Act of 12 May 2011 on consumer credit (Journal of Laws of 2011, No. 126, item 715, as amended)

Non-bank loans are a simple and convenient way to finance Christmas shopping. Let’s just remember to keep a little cold blood and rationality while choosing the parameters of the loan. Let’s check what level of burden will not be a threat to our financial liquidity in the coming months.

Forward Loans

 

With a forward loan, you can benefit from the currently low interest rates for the follow-on financing of your construction loan. A forward loan is interesting for anyone whose fixed interest rate mortgage expires over the next few years. In this case, it is best to think about their follow-up financing at an early stage and weigh up whether they should not already tie their remaining debts to the current low interest rates.

What is a forward loan for follow-up financing?

What is a forward loan for follow-up financing?

The forward loan works in principle quite simply. If the fixed interest on your construction loan expires, your bank will suggest follow-up financing options so you can plan the repayment of your remaining debt. With the expiry of the interest rate, you then have the choice to continue the loan with your bank or replace it. An effective means for this is a forward loan.

Basically, a forward loan works so that before the interest rate period expires, you can take out a new loan from another bank, which you use to repay the remaining debt at your bank. Of course, the new loan is usually paid back to your new bank in installments. The point is that you agree on a new fixed interest rate at the conclusion of follow-up financing, at the current conditions.

If the interest rate lock on your mortgage loan expires in 24 months and you are already opting for a forward loan as follow-up financing, you are guaranteed to pay only the current interest rate, regardless of whether it has risen or fallen in 24 months. You get planning security and are independent of possible interest rate fluctuations in the future.
Until the end of the fixed interest period, you will continue to pay your repayment installments as normal. On the day the mortgage expires, the new bank pays the remaining debt to your previous bank. The mortgage is transferred to this bank and you pay the remaining debt back at the agreed rates at the current low interest rate.

Advantages and Disadvantages of Forward Loans

Advantages and Disadvantages of Forward Loans

Probably the biggest advantage of follow-up financing via forward loans is the good planning. Especially in times of financial crisis and the sometimes unpredictable interest rate development, you can already set today how high the interest rate on your follow-up financing will be in several months or years. Currently, interest rates are lower than they have ever been. If the current decline in interest rates reverses to the opposite in one year, there is a risk that the repayment of your remaining debt due to high interest rates will be really expensive.

On the other hand, the conclusion of a forward loan is basically nothing more than a bet on rising interest rates. The agreed interest rate applies in any case. So if it happens that interest rates go down even more after the loan is over, you still pay the agreed interest rate, which makes your follow-up financing more expensive than it should.

Experts currently see no acute indications that interest rates will soon rise again. However, it is also clear that they can hardly sink further. For you, this means that you do not have much to lose, because interest rates can hardly fall much lower. On the other hand, if they rise again in some time, you will profit from the low interest rates in the future and save a lot of money as a result.

Forward Loan: Information about costs and decision time

Forward Loan: Information about costs and decision time

The question remains to clarify when exactly you should make a decision for or against a forward loan for follow-up financing. The basic rule is that a forward loan is available to anyone whose fixed interest arrears expires in 12 to 66 months. With a shorter period than 12 months, a forward loan is barely worth it, if it is offered at all. For more than 66 months, no bank should commit itself to the current interest rates.

As far as the timing of the decision is concerned, it is up to you whether to opt for a forward loan now, or to speculate that interest rates will continue to fall over the coming months. Before concluding a forward loan, you should absolutely compare various offers and pay particular attention to the interest premiums.

What are interest premiums?

What are interest premiums?

Banks are taking some risk with fixed interest rates for the future. To do this, they usually charge an interest premium of 0.01 to 0.03 percentage points per month, which elapses between the conclusion of the forward loan and the expiry of the interest rate commitment on the current loan.

Forward loan example: You sign today the contract of your Forward Loan. It will take 24 months for the loan to end its loan and the new bank to pay the loan. With an interest premium of 0.02 percentage points, the interest rate of your forward loan increases by 0.48 percentage points. For example, if the current interest rate is 3.10 percent, the interest rate on your forward loan is 3.58 percent (3.10 percent interest rate + 0.48 percent interest premium).

Due to the fact that banks are currently getting long-term loans at much better terms than short-term loans, many of them are currently refraining from applying interest rate surcharges. Should you still hesitate and find that interest rate surcharges are on the rise, you are well advised to complete the forward loan as soon as possible, as high or rising interest rate surcharges are a clear indicator that banks are expecting interest rates to rise again.

Additional costs hardly arise with follow-up financing via forward loans. The annual percentage rate of interest is set at the time the contract is concluded. In this all costs are included, which are incurred by the loan. The only additional cost is the debt restructuring, because since the mortgage is transferred from one bank to another, the land registry must be active and also a notary involved.

These costs are incurred only once. How high these costs are depends on the individual case. As an order of magnitude, however, you can expect something more or less than 0.17 percent of the remaining debt. For example, if your remaining debt amounts to 150,000 euros, you can expect a one-time extra for the debt restructuring of approximately 255 euros.

Conclusion on follow-up financing by means of forward loans

Conclusion on follow-up financing by means of forward loans

A forward loan is currently a very interesting option if you want to continue to benefit from the current low interest rates in the future. While you are making a bet that you can win or lose, the risk of loss is pretty low right now. In times of turbulent financial markets and unpredictable changes in interest rates, you should weigh up whether to speculate on even lower interest rates or, in the long run, at least in terms of follow-up financing, decouple from the risks of rising interest rates.

Our topics on this page

  • 1 What is a forward loan for follow-up financing?
  • 2 Advantages and Disadvantages of Forward Loans
  • 3 Forward Loans: Information on costs and decision time
  • 4 What are interest premiums?
  • 5 Conclusion on follow-up financing via forward loans

Loans on Business Startup

In order to obtain loans for business start-ups and to be able to build and realize the desired company, it is necessary to look at various offers and thus to find an adequate loan. On the Internet, loans can be selected in different amounts and, if the credit rating is lower, can be applied for with other hedges.

Especially when starting a business, real assets or a high credit rating are usually not available. At the house bank, an application would lead directly to the rejection and not end with a positive approval. For this reason, it is advisable to look at the same time on the free financial market and here to compare different loans when setting up a business.

Save by comparison

Save by comparison

Lending at start-up should be equally favorable interest rates, with low fees and high flexibility. In order to find a model based on one’s own claims and to make the right decision, various loans from private investors or independent financial intermediaries can be viewed and compared in direct comparison.

If one uses a comparison before the final decision and chooses only one credit that meets all criteria, not only too expensive, but also less flexible and thus uninteresting loans can be taken off the agenda. Loans can be applied for on the free financial market and granted unbureaucratically in varying amounts.

Even in difficult situations, free financial service providers and private investors offer a solution and decide not on the credit rating, but on the basis of actually granted collateral on the loan. The application is easily put online and processed within 24 hours.

Non-bureaucratic processing and fast payout

Non-bureaucratic processing and fast payout

Especially in the area of ​​start-up lending, in most cases it depends on the timely demand of the loan amount. Before a company can start, important purchases must be made or the appropriate premises rented. Long waiting times prove to be extremely unfavorable for this reason and would delay the start-up useless.

With an instant loan not only the approval within 24 hours takes place, but also the disbursement is made immediately to the borrower. After the statutory waiting period of 7 days, you can directly dispose of the sum and start the business.

The credit rating plays a minor role. All start-up loans can be secured with assets or a guarantee from friends and relatives, but also from business partners. Security is only resorted to in the event that the borrower does not pay agreed installments on time or in sufficient amount. Also, the guarantor is only taken in breach of contract by the actual borrower in the liability of the lender.

Loan for Entrepreneurs with Negative Private Credit

If you want to take out a loan for start-ups with negative private credit, then this is a loan request, which requires intensive processing by the bank’s corporate client advisor but also by the borrower himself. So prepare thoroughly for the loan application!

This preparation consists of various phases, the “tidying up” of one’s own private credit entry, the search for alternative sources of funding and also the provision of collateral. So you can prepare well for the loan for start-ups with negative private credit:

Step 1: Clean up, settle the open positions with the creditors

Step 1: Clean up, settle the open positions with the creditors

Many a negative entry in the private credit is based on a dispute with, for example, a mail order company or a telecommunications company. If there is still an open, demanded and registered claim, you could contact the creditor. And there ask how fast he releases the private credit entry for deletion, if you pay for a part or the entire claim.

This is particularly useful in all cases when the dispute has started with a different contract interpretation or an exchange has begun and both sides have not agreed. Even if you have outstanding loan installments, you should pay them back first to signal reliability. The reason for this is that even in a low-interest-rate phase you can not expect banks to take on further risks despite a very low interest margin.

Step 2: Check all funding opportunities and sources of money

Step 2: Check all funding opportunities and sources of money

In the case of a loan for start-ups with negative private credit, both the lender and the borrower face a major challenge: In almost all start-ups and business openings, massive investments in the start-up phase are offset by later sales expectations.

Many companies and services need to be well known, so a period of red numbers seems almost inevitable in the early months. It is helpful if you can not just service the running costs from a loan, but other sources of funding are also available. Check all funding pots and ways to support the company foundation!

Step 3: Offer additional collateral or guarantees

Step 3: Offer additional collateral or guarantees

If you do not have a good credit rating and maybe a negative private credit entry, then lenders like to see the risk spread across multiple people. If you have a guarantor in the relationship or the circle of friends for the credit for start-ups with negative private credit, then this can mean a significant risk reduction for the lending bank. According to the principle that more shoulders can also carry more load, the bank’s risk assessment is better.

As you prepare and follow through the steps, the chances of paying the loan are much higher!

Shopping and Finance – Sometime and Today

Shopping and finance – sometime and today

The development of technology makes that what a dozen or so years ago required a lot of effort today is child’s play. The Internet has made services to a higher, previously unknown level. This applies not only to trade, but above all to the financial sector.

Let’s go back 25 years. Your mom has just decided to buy a camera. How did it lead to the end? She left the house and for 20 minutes she went to the nearest electronics store reading a newspaper bought at the newsstand at that time. Then, when she reached the place and found the camera stand, for the next half hour she compared individual models, flooding the shop employee with questions. In the end, she made a decision. She chose the camera and went to checkout. She pulled a wallet out of her purse, stuffed with banknotes, paid and left. With the camera and an empty wallet. Some time later she decided to go on vacation – after all, the camera can not be useless. What did the ticket purchase look like? Like the camera. Travel to the facility and finalizing the transaction.

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Now, let’s think about how these issues look a quarter of a century later? On a computer or phone, you start the right page, select products, compare them, and read the opinions of other people. Then you order, make a transfer and wait for the courier who will come with the camera or – in the case of a ticket – you will immediately receive it on your e-mail. The whole process is definitely less time consuming than a dozen years ago and you can go through it sitting deep in the chair during the break of the match. The development of the Internet has made the percentage of people making purchases with it bigger and bigger. This method is simply more convenient. Especially young people appreciate it. The situation is similar to the financial services market.

The younger generations want to make use of them as simple and quick as possible. Checking account balance? Paying bills? Using a loan? Mobile device with internet access is enough for everything. It’s much more convenient than searching for stationary points. To find out something about the service you intend to use, just a few minutes spent in the relevant forums and familiarize yourself with the company information on its website, for example in the ” about us ” tab. The Internet is playing an increasingly important role, and finances are the best example, as evidenced by the number of closed outlets – in 2017 there were over 400 stationary points left. Information about a product or company – including its contact details – is just a small part of what you can find on the web. From the point of view of people wanting to use the service, it is also important that they can submit an application without leaving their home.

Shopping, ticket booking or the use of financial services – today all these activities are extremely simple. This is especially true of young people who are eager to use technological innovations and the opportunities they bring.