First of all, it is always worthwhile to apply for a loan. Why? Because requesting and comparing quotes is free and helps you find the best loan offer. So you can only win.
But how is the loan tendering progressing in practice? We’ll tell you!
Submit loan applications
Initially, you need to get loan quotes to compare.
Comparing a loan is usually free and does not bind the borrower to anything yet. You have the legal right to know the interest and costs of a loan exactly before making a loan decision.
Alternative loan application methods are:
Loan Comparison Services
Just like this is Allan Quatermain. This way, you don’t have to scratch dozens of applications individually for each location, but get more loan offers with one application.
Loan applications online
However, if you only want to compete with a limited number of banks (or otherwise just love filling out forms), you can of course approach the lenders directly by filling out their loan form.
Visit to the bank
If you are applying for a bank loan and do not want to go online, you can also traditionally go to the branch. This is how you will face the expert face to face.
Analyze and compare your loan offers
You now have more than one approved loan offer. The next step is to look at their contents one by one and compare them one by one.
What then should the offers compare?
Loan amount and term
Sometimes it may happen that you are not offered the loan amount you want. However, make sure that in the right offer, the loan amount covers your needs.
It is also advisable to have a suitable length of loan period: too long a loan period increases the total cost of the loan, but too tight a schedule may drive your own economy into a tight one.
The nominal interest rate is the interest rate on the loan, consisting of the reference rate and the margin. The nominal interest rate is always stated in the loan agreement.
The side costs of a loan
In addition to the interest rate, the loan often comes with a variety of overhead costs. The amount of these costs may vary greatly, and some may not charge for the overhead costs.
The most common cost per side are:
- Opening Fee = payable once the loan is ‘opened’ as its name implies.
- account management fee = monthly fee for managing a loan account.
- withdrawal fee = the fee charged for each withdrawal of the loan amount.
- Billing Fee = Charged upon invoice posting.
The annual percentage rate
No, the annual percentage rate of charge is not the same as the nominal interest rate of a loan. The annual percentage rate includes both the nominal interest rate and all side charges, indicating the actual cost of the loan.
Note that the actual annual interest rate of the loan is not always stated in the loan offer. In this case, you have to calculate it yourself, for example, using the interest calculator.
Total cost of the loan
In practice, you should be most interested in how much of your account will be lost as a result of the loan agreement. The total cost of the loan will tell you this, so when comparing, it is advisable to place a high weight on the total cost.
Thus, the total cost of a loan includes everything: the amount of the loan to be repaid, the interest accrued over the life of the loan and the additional costs.
Loan repayment method
There are mainly three types of loan repayment: annuity, flat-rate and flat-rate loan.
Choosing a shortening method is often a matter of taste, but sometimes the wrong choice in the wallet may feel uncomfortable.
Choose the best loan offer
Of course, once the candidates have been examined, the winner will be selected. The important thing is that the amount of the winning offer, the payout period, interest rates, other expenses and the type of loan itself are appropriate to your needs and ability to pay.
As mentioned, the total cost of a loan should probably have the biggest impact on choosing the best deal. The best loan offer will save you a long penny.
The loan offer you receive can and should always be negotiated. Collecting and comparing offers gives you an advantage over loan negotiations when you know the general interest rate.
Sign the loan agreement
Once the winning offer is clear and you think the terms of the loan are acceptable, you can sign the loan agreement.
In loan comparison services, this can usually be done easily with online bank IDs, but of course, the signature can also be traditionally done locally at a bank branch.