Interest on the loan: how not to cash in on itself?

Many people are afraid to take the credit because of high interest rates.However, it should be noted that without the stock of knowledge in this field, even the low-interest loan can lead to serious losses.

First, let's deal with the fact there are some schemes charging interest.Accepted provide two basic: a standard (classical) and annuity.Both include the body of the loan and interest themselves.

In the standard scheme of permanent interest accrued on the balance of the loan.In fact, at the same time reduced and interest on the loan, and his body.

Regarding the annuity scheme, it is a little more complicated than usual.In this case, the borrower pays a fixed amount every month.But the fact that in the first half of the period a large portion of this amount is interest, and in the end - the body of the loan.

Which of these schemes is more profitable?Consider them in practice.And the first criterion, which is worth paying attention to is the possibility of early repayment.For example, this month you need to pay $ 800 ($ 500 - the body, and $ 300 - interest on the loan).If it is a standard procedure, it is not at the expense of making $ 800, and $ 900 in the next month you will be able to pay $ 100 less.Having the desire and ability, you will be able to repay the loan much earlier.

If you choose an annuity, the ability to repay the loan ahead of schedule is also present.However, it will not help you get rid of the need to pay interest.After all, the bulk of them you have to pay it in the first months.Plus, you may have problems with the fact that banks are not particularly happy to potter with conversion scheme.

The next point to which you should pay attention to studying the interest on the loan and the profitability of this commission.You should not rely on the fact that banks offering higher rates almost do not take money for the service.Very often, the presence of the various commissions will learn after the conclusion of the contract.Of course, if before the registration you ask a direct question about this staff, you will get an honest answer.However, they tend to focus on the benefits of supply and divert attention from its shortcomings.Including from commissions.From this point of view is more profitable immediately pay a large one-time commission, than to allow the bank for many years to pull out your interest for the service.

Also be sure to check out so for how long must make monthly payments.For example, if a grace period under the terms of the bank is 45 days, it does not always mean that you can make the next payment within 45 days after the previous one.It is likely that we have in mind the need to make payment before the 15th of each month.Then it will not matter, the 1 st or 31 th you took a loan - until the 15th you have to make a payment.

Attention!Interest on bank loan brings profit.That is why the repayment of interest is for him in the first place.That is, if you did not have enough money to make the full monthly payment, the first to be paid interest on loans, and the rest of the money has gone to reduce the body.That is, the body will "hang" in the same state, and the bank will continue to charge at him penalties and fines.

carefully read the conditions of the loan agreement, and then you will be able to avoid unnecessary expenses and excitement!