No matter how much money we are talking about, it is more profitable than borrowing money, and every one of us uses this financial service from time to time.
Why is it? The answer is trite : for whatever purpose we spend on the credit we receive (for travel, for a car, for a home or apartment), we have the opportunity to reap the desired benefits now, without spending many years collecting.
The only downside to any credit is the interest rate
But its cost is also relative. Inflation makes it less expensive after a while and your purchase becomes more expensive. Most often, a comparison is made between a target loan (the goal is to buy something) or a consumer loan.
The latter are not as profitable as the first, but you can spend that kind of credit on anything you want. This bank product has a clear repayment schedule, but only at the time of presentation. Later, the borrower realizes that he will often have to repay the loan, even at double the amount.
How to properly compare loans
The first feature of any loan comparison is the interest rate, but the repayment term must also be considered. If this period is too long, it does not matter how low the annual percentage is because you will overpay the rate more than once over several years. Conversely, if the repayment term is short, you may not be afraid of high interest rates, as you may only pay part of the annual commission within a few months.
If you do not have sufficient borrowing experience and you cannot objectively assess the terms of multiple creditors, a convenient online loan calculator can be used. Such an assistant is available at many online services or at a particular creditor’s Good Finance bank.
By defining the key parameters for each loan
And entering multiple ones there, the calculator will calculate each offer and you will have a clear idea of which one is the most advantageous. When choosing the criteria for your loans and comparing them, you can’t ignore who exactly wants to help you financially.
Banks, followed by microfinance institutions and pawn shops, can offer the most favorable repayment terms. Lastly, there are private investors in terms of repayment transparency, who almost always give up the former and end up changing the rate or maturity.