Are you planning a large expense and are you thinking about taking a loan ? There is only one problem – in which bank to do it. There is nothing else to do but visit several branches in person or browse their offer online. Read below what to pay attention to.
This is the Actual Annual Rate of Credit offered by the bank. Specifies the degree of costs incurred in connection with the signing of the loan agreement. APRC shows how much we will really pay for a given offer.
Find out the real cost of credit
To choose the best offer, it’s not enough to just listen to the ads and read what’s on the leaflets. It is important to know the true cost of obtaining a loan – to do this you need to analyze the Real Annual Interest Rate.
How does the bank calculate the APRC?
Very often, it turns out that despite the low nominal interest rate, the sum of additional fees that must be incurred causes a doubling of the interest rate that is advertised as the lowest. That is why it is worth checking the APRC, which these fees include. In addition to the nominal interest rate, the cost of the loan includes:
- bank commission,
- credit insurance (though not always),
- fee for processing the loan application (often occurs with a mortgage loan),
- other fees (e.g. for early repayment, conversion or suspension).
However, the APRC does not include additional fees. These include possible costs of reminders sent to the customer due to delayed installment repayment or credit card fee or account maintenance, which the borrower has opened to settle accounts with the bank.
The indicator also takes into account the time over which the loan is repaid. Sometimes the situation can get complicated when, according to the APRC, you will try to compare loans with different repayment periods. In such a situation, the costs – in the case of a longer loan period – are divided into more installments, which may even give the APRC a lower APR. It is also important when you pay most of the initial fees. If they are calculated in the initial loan period, this may also underestimate the ratio.
Do banks have to inform about APRC?
Banks have a statutory obligation to provide information on the APRC ratio. However, they do not always do it or not everyone pays attention to them. Therefore, if you are guided by the security of your own finances, you must ask a credit counselor about this.
When comparing a loan, it’s worth knowing about the RRS O ratio and the fact that we have the right to know it. However, it is also worth asking about what is included in it. If we want to compare several loans based on the discussed indicator, let’s pay attention to their amount and loan period. Only then will the comparison be reliable.