Well, everyone does so – you say – looking for the cheapest loan. Cash loan, loan or loan for an apartment. And this is the rational approach of most consumers.
When choosing a bank, you’re guided by the principle: find the cheapest loan. This is not a product available on the shelf in the supermarket, where paying less you will usually get a product of inferior quality. With loans and loans you look only at costs.
However, there are some but points to pay attention to. Both banks and loan companies tempt with zero interest rates on the loan. But if we do not know that we can distinguish nominal and real interest rates, we will easily get caught in the “promotional offer”. When borrowing money in banks, credit unions or loan companies, we always have to give back more than we borrowed.
However, you can not wait and the loan must be on NOW. Do not choose the first best opportunity by suggesting a bank or loan company’s advertising. Advertising is to make you choose this particular institution without thinking about it. It’s not a nice actor or puppet who will pay for your commitment. It is you, each month, out of your own pocket, that you will give away your savings for using someone else’s money.
Interest rate on the 0% loan
Advertising of a cash loan at 0%, in most cases indicates a nominal interest rate. The loan costs, however, do not consist only of interest on the loan, but also additional costs, e.g. in the form of commissions. Maybe there will be insurance? And some of the loan companies still add “costs of consulting services”. And where is the loan at 0%? Check how much your APY loan will be, i.e. Annual Actual Interest Rate, which speaks of the actual, in percentage terms, cost of the loan. In short: the higher the APY, the loan is more expensive.
Where to start looking for a loan
If you have a bank account, then you are looking for a loan from “your” bank. We already have a certain account history in this bank, and the bank, based on financial flows made on the account, will more easily verify our creditworthiness. In addition, as a “deserved” client, we have a better chance of negotiating better credit conditions: lower interest rates, commission or loan margin, as well as a credit decision will be faster.