Comparing loan costs is not as easy as some guide authors would like. Theoretically, this should be easier due to the fact that lenders have to provide MTI, but how does it look in practice?
See what are the costs of cash loans at various banks in Poland
MTI helps, but …
It certainly will not hurt to look at the APRC, ie the amount of the actual Annual Interest Rate, but this indicator – which is already visible after the very name itself – will depend on the period of crediting. Therefore, it can be used only to a limited extent – when you compare loans repaid in a very similar period (for example, six months with seven months or fourteen years with fifteen years). MTI if you compare the loan for one year and three years, you can also decrypt it, but you can not read the result straight away.
Comparison of initial fees
Before we talk about comparing the APR, it’s worth looking at the initial costs. The APRC includes all fees, but does not inform the customer about the order in which they are paid, and it may turn out that the handling fees charged already at the same payment are so big that, although the credit is actually cheap, the practical it is not so profitable anymore. So let’s look at the commission, the amount of preparation fees or fees for starting the loan, because they affect the amount that actually goes to the borrower’s account.
It is worth mentioning here one more important aspect of comparisons. The fact that the MTI of two credits is 10% does not mean that both will be just as cheap. Firstly, because the annual rate counts for representative examples, not for a particular borrower, and secondly because it may include various fees at this cost, including negotiable ones, such as margins or insurance, which can be dispensed with . It is worth comparing not only the overall cost of the loan, but also – separately – the component of this sum.
Banks sometimes, for example, give up a commission for promotion. That would mean that the loan would happen. However, it does not happen if the bank raises its margin at the same time. Then the interest rate will be just as high, despite the fact that subjectively actually such a loan may be more advantageous, because the commission rate is slightly different in relation to the amounts visible in the loan application.
Is it possible to do it alone?
This is an important question. Calculating the cost of credit is a complex task, and hardly anyone does it right. In turn, visiting all banks and completing several applications does not make sense. So let’s use the comparisons prepared by the advisers. You can never approach them with absolute certainty, but you will certainly be able to at least exclude some of the most expensive banks, and that will limit the amount of calculations that you will have to carry out yourself.
In the end, you will still have to talk to the bank’s credit advisor to find out the final calculations – all roundings are good only at the stage of preliminary comparison of cash loan offers .