What affects the cost of credit or loans? Is always a payday loan with an interest rate of 4.99% better than a loan with an interest rate of 7.49%?
Certainly every loan is associated with the costs of its award, but not every loan. The loan may be granted at 0%, without commission and other additional costs. It results directly from the Act on consumer credit. With loans it is not so and they can not be granted at zero interest rate.
In the case of loans, one of the elements that affects the cost of the liability is certainly the nominal interest rate. The interest rate can be fixed or variable. The choice of interest rate has a significant impact on the cost of the loan. If we take a small loan amount and for a short period of time, banks usually suggest a fixed interest rate. This means that the interest rate on the loan will not change throughout the loan period, even if the interest rates are raised. The variable interest rate depends on the NBP interest rates. If the interest rate is reduced then the interest rate on the loan drops and we pay smaller installments, if it grows, we pay higher installments.
What gives you consolidation loans
The nominal interest rate in accordance with the provisions of the Civil Code can not exceed four times the Lombard rate of the National Bank of Poland. The basic NBP interest rates .
Interest rate on payday loan only 4.49%
Banks like to “manipulate” interest-rate advertising. How many times we see that the interest rate is only 4.99%, we must take into account that the cost of credit will be influenced by a different factor. Most often it is a commission. In addition to the commission in the costs of loans, as well as loans, we can distinguish: additional fees, costs of additional services (eg “advisory fee” used in some of the loan companies), insurance, home services (in the case of non-bank loans).
Actual Annual Interest Rate
It is a measure of the total cost of a loan or loan in percentage. It is not devoid of flaws, but it is currently the best way to compare loan offers and choose a cheap loan or a cheaper loan. In the case of banks, it is currently difficult to find an offer with APRC higher than 22-25%, in the case of loan companies it is not uncommon when this measure for the same liability is even 80-100%. In the case of payday loans it is even 1500-2000%.