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Today, many of us use the support of banks when they need cash. However, there is no hope that you will give away as much money as you borrowed. So how much more should be paid to the bank? Can it be counted at all? How do you check the total cost of a loan?

What does the cost of the loan consist of?

A loan, and therefore often simply a cash loan or consumer loan, is the provision of cash for a specified period of time . Today it is in this way that most money is borrowed for sudden expenses. Of course, you must be aware that when reaching for money from a bank or non-bank institution, you will have to pay for it.

Commission and the cost of the loan

So what does the loan or installment loan cost? Most often it is a commission . It is nothing more than a reward to the bank for having granted a loan. The commission can be one-off, and it can be included in the cost of each monthly installment. Importantly, the commission is expressed as a percentage. So it depends on the value of the loan. There is nothing to be deluded that if a bank offers a commission-free loan, it will actually be. Banks and non-bank institutions give nothing for free. So they will certainly compensate for the profit they could have had on the commission. How? For example, adding other fees.

Interest on the loan

The cost of the loan also includes interest. They are calculated on the outstanding debt based on the interest rate set out in the contract. However, it is worth knowing that the maximum amount of interest is limited by law. How to understand? Pursuant to the Act, the limit is calculated based on the reference rate. You can choose two types of interest. Constants and variables . The first does not change during the entire loan period. In turn, the variable interest rate depends on changes in interest rates.

Other credit charges

The cost of credit also includes what installments you choose. You can usually choose equal or decreasing installments, less often increasing installments.

Very often, the cost of credit also includes insurance. The one that will secure the liability in the event of job loss, illness or death of the borrower.

Sometimes the costs of credit should also include fees associated with the use of additional services. Although it is forbidden to require the customer to use them, they often condition the use of some promotion.

How to calculate the total cost of the loan?

And how to calculate the total cost of the loan? A rather complicated mathematical formula serves this purpose. It is definitely better to use the loan cost calculator when you have all the detailed information about a specific offer. The bank must provide all data. Being in their possession, you can easily calculate what costs you have to take into account when deciding on a specific loan.

Will the real estate loan become a time bomb?

Those who build or buy a house these days benefit from one thing in particular: from historically low interest rates. The low key interest rate and the situation on the financial market ensure that loan interest rates remain at the lowest level. In the meantime, real estate loans are only half as expensive as the offers around ten years ago. Anyone looking for a ten-year loan had to pay an average of 2 percent interest in mid-January. In addition to the low interest rates, the borrowers have a ten-year term. But the appearance of cheap real estate loans is at least to some extent deceptive. According to experts, it cannot be assumed that interest rates will be as low as ten years from now. But what happens when lending rates rise? Will there be a dreaded debt crisis in Germany?

Low interest rates increase equipment requirements

The currently low interest rates ensure that many builders and property buyers are ready to take up a higher loan amount. Thanks to the lower additional financial expenses caused by the loan, you can quickly have a nicer bathroom, a nicer plot of land or simply a better location in your own budget.

This attitude, however, could develop into a ticking time bomb. With high loan amounts, rising interest rates are much more noticeable. Much of the real estate loan that is now being concluded will expire in ten years. Then the borrowers have to renegotiate with the banks. According to the Bundesbank, residential construction loans in Germany totaling three trillion euros were granted to households in November last year. About three quarters of these contracts have fixed interest rates that go beyond five years. Most of the banks rely on a fixed rate of ten years.

Follow-up financing involves risks

The basic principle is that every follow-up financing comes with certain risks, because the terms offered by the bank are basically in the stars. Such market conditions are not uncommon. In other European countries, however, such developments have repeatedly led to consumer indebtedness crises. So far, this has largely been ruled out in Germany. The reason given is the conservative mentality of German citizens. The majority of Germans raise a considerable amount of equity for construction financing. Borrowers borrowed an average of 75 percent of the required amount last year. The rest was raised as equity. In the Netherlands, for example, the picture was very different. Dutch borrowers mostly borrowed more than 120 percent from real estate loans. The now quite high repayment shares offer further security. According to real estate economist Michael Voigtländer, Institute of the German Economy, the days when borrowers only paid out about 1 percent monthly were long gone. In the meantime, 2.5 percent are considered the standard rate.

Up to 3 percent repayment

In some cases, the repayment rate is even higher. The number of contracts with a repayment rate of 3 percent has increased significantly. According to Christian Walburg, Association of German Pfandbrief Banks, the burden on borrowers remains quite high, especially in the first few years. Consumers consciously accept this. Here, too, the picture is different in other European countries. In the UK, for example, despite low interest rates, borrowers haven’t paid a cent off their loans for a long time. As a result, households were falling further and further into the dangerous interest rate trap.

In this country, there is a certain level of security from the banks, because loans without repayment are not granted. Most banks even require a repayment of 2 to 3 percent for the loan. If the customer does not want to accept this, he will not receive a loan. The banks are currently recommending paying the home savings contract instead of repayment. At first glance, this may be tempting, but consumers have to pay a lot of money to fix the interest rate.

For urgent needs, we are looking for a quick injection of cash that will allow us to achieve specific goals. By borrowing money in installments, even in a small amount, we are looking for the cheapest options, including free loan offers. How not to get trapped? Are free loans safe?

Are there free loans?

Everyone who decides to borrow money wants to lose as little as possible, ie at best, give back exactly as much as borrowed, without any additional costs, fees, commissions or interest. Such offers are also available on the market, although they are usually offered by non-bank institutions, so-called parabanks. Most often they also apply for small amounts, up to a few thousand and for a short repayment period – from a dozen or so days to about 3 months. They are also one-time proposals – they are to attract new clients who have not yet taken loans from this particular loan company. In other words, it is a smart marketing procedure.

How to safely take a free installment loan?

When someone offers us something for free, the red warning light should light up first. When taking loans, especially those fast non-bank, it is important to read the offer in detail and read all the entries. Yes, there are free loans, but they usually have a fairly detailed record of the granting rules: to whom, on what terms, to what amount, to what time. Usually, penalties are also precisely specified if these guidelines are not met. So if we are late with repayment at least one day – we will face a high penalty for failure to fulfill the contract and the free loan will cease to be free. Before we take a loan, let’s thoroughly analyze everything.

Where can you find a secure free loan?

Free loans are quite often proposed by many loan companies, so the best solution is to search first of all on the network and use the ranking of free loans and payday loans comparison. It will allow us to find out what the situation on this financial market looks like. It is best to check individual companies, familiarize yourself with their offers, and also with the very opinion about them. You need to know the lender and choose the offers carefully. You have to wisely borrow, otherwise you can lose a lot.

What to look for when choosing a free loan?

The most important basics have already been mentioned, but it is worth consolidating the right course. Currently one of the most popular forms is taking loans online – here you have to be very careful. Such offers are easy to finish with minimum formalities, but they also offer narrator options for choosing a favorable offer – there is no room for conversation and negotiation. Caution is the basis and you must be well acquainted with the lender. To a large extent, the security of free loans will depend on us, our attitude and behavior. Only in this way will we be able to really save without losses.

Who can benefit from a free installment loan?

By definition, loans are easier to obtain because there are far fewer formalities to fulfill. Which does not mean that anyone can get it. Companies offering free loans, I need to be sure that a person is reliable and trustworthy, and above all – solvent.

They can apply for it the people working on the employment contract / order / or work on the contract, but also having a retirement or pension, engages in business activities works by odd or having all the sorts of benefits. In other words, they must prove that they have even a small but stable income. This is the basis. In addition, BIK is often not checked, so the chances of receiving it are really great.

Can you manage your credit card as skillfully as Las Vegas gamblers handle your cards? You can learn how here.

Credit cards are important financial instruments, but you can also see them as a kind of game.

We all know that people who use their cards irresponsibly accumulate overwhelming debt, but if you play this game correctly and manage to stay out of debt, you can give your cards enormous value. Here are six tricks that have worked for me.

Reconsideration

You have good credit, but somehow your card request is rejected. You can sit down and wonder about the factors that may have contributed to your denial or you can take another opportunity to get your credit card. The fact is that their initial rejection was probably only because of some assumptions of the team regarding their solvency and were unable to consider other important factors. What people don’t realize is that you can call your bank, talk to someone and ask them to reconsider.

When you arrive at your bank, remind the representative of your excellent payment history. You can also offer to reduce your line of credit or close other accounts you have with them. Recently I was able to get approval for a card by closing another account I had with them that I was going to cancel anyway. Banks desperately want to do business and they are anxiously waiting for you to call and offer them a good reason to approve.

Surprise bonus

Have you ever applied for a credit card only to find out later that there was a better subscription bonus offer available? Just like the reconsideration method, you can contact your bank, inform them of the other offer and ask them to apply it to your account. It is as easy for your customer service representative as changing the “Promotion Code” field on your computer screen. While this can be done over the phone, many prefer to log in to their bank’s website and send a message. By doing this, you will have the Bank’s response in writing, so there will be no controversy about how many points or miles you should receive.

Threatening with a chargeback

I cannot tell you how many times I have met with many consumers who have participated in extended battles to get their money from unscrupulous merchants. They call, argue and even shout at the representatives of the merchants at a time that often results in a vain attempt to get a refund. If you paid with your credit card, you should only waste your time on a single call that should be directed to a supervisor. If that person is not willing to return your money, inform them that you intend to request a chargeback from the bank issuing your credit card.

Retailers live in fear that the increase in business commissions will result in a chargeback, and they often reconsider their position at the moment they hear that word. Otherwise, a quick call to your bank will result in a temporary credit that will become permanent once you provide the supporting documentation for your claim.

Double your registration bonus

Credit card gurus live on the incredible sign-up bonuses that come around every now or so. Have your spouse or partner apply for the same card. Or subscribe to the Business version of the card. While you are not tempted to spend more, there is little to lose and much to gain.

Maximize the account statement cycle

Those who pay their balances in full and on time are blessed to receive a free loan from their banks. This is the smartest way to use your credit cards, but you can even take this to the next level. Any charges made the day before you have your closing statement will be charged 20-25 days later. But if you do that same charge the day after your statement closes, then you have another 30 extra days to pay without incurring interest. This means that you can get an interest free period of up to 55 days!

When the cash is tight, many people know how to wait until shortly after their statements are closed to make purchases. What most people don’t understand is that with some banks, you can extend your payment cycle by moving your due date. You may not be allowed to do this over and over again, but it is a great way to get your closing period a few days in order to delay your due date.

Take advantage of gift cards

These days, the terms that many reward cards have contain all kinds of stratagems to make you spend more to receive more points, miles, or money back. Some only offer a welcome bonus after spending a specific amount, while others give special rewards for transactions in certain merchant categories. To take advantage of these promotions, the worst thing you can do is spend more money just to earn a reward.

Instead, you can use the gift card in creative ways. In order to reach the minimum spending threshold for a sign-up bonus, you can use your credit card to buy gift cards for frequently visited merchants, or even cash cards. Simply make the purchase before the deadline and use the gift cards later. You can also buy gift cards at grocery stores to maximize the expense bonus in these categories. For example, if we have a large card that offers extra points for groceries, buy gift cards at your grocery store to get bonus points for purchases at other stores.

You cannot expect to defeat a card beam in the street or defeat the house in a casino, but you can regularly win big with your credit cards. The key is that banks are intensely competing for their business, which will always be their ace in the hole.