Consumer credit guide: tips and news

Speaking of consumer credit, the first thing that comes to mind is how to avoid having excessively high interest rates, given the period of crisis that our country is going through.

Here are 5 simple but effective tips to avoid too high rates, for 2016 and for the years to come.

Here are 5 simple but effective tips to avoid too high rates, for 2016 and for the years to come.

1 – Prefer the Bank and avoid the usury rate.

To avoid high interest rates, it is advisable, when choosing the credit institution, to prefer a bank rather than a financial institution as the provider of the loan, as the latter generally provides for higher interests. However, you can get around the problem with online financing, where there is no shortage of good promotions. It is however important to protect yourself from the usury rate, and to find out if the proposed one is at risk, just use the special calculators available online.

2 – Compare the different offers

Do not stop at the proposal of your bank, but you must inform yourself about the different proposals of the competing banks and compare them with each other, in order to have a broader picture, asking for the European information document on every occasion.

3 – Greater importance to the steady-state rate

It can happen that banks often offer promotions with a rather low entry rate for the first installments, which is however destined to increase when the promotion period ends. These advertising offers may therefore seem initially convenient, and then may not turn out to be such. It is therefore necessary not to be influenced by the “unmissable opportunities”, but to give greater importance to the rate at regime, that is the real rate that will be applied by the bank during the loan.

4 – Reduce pre-amortization

Pre-amortization is the period of the repayment plan for consumer credit received which provides for the payment of installments made up of interest only and which is usually applied by banks for technical reasons concerning the alignment of maturities. It consists of paying lower initial installments, but consequently the final costs will be much higher. The longer the pre-amortization period, the higher the costs.

5 – Attention to ancillary costs and not only to rates

The items that affect the cost of the loan as a whole are different and extremely variable, even within the banks of the same group. Focusing only on the nominal rate (generally indicated with the Tan) can be misleading in the choice, given that it does not include the costs of rid (which can go beyond 5 euros for each installment) and those of the preliminary investigation.

How to simplify the comparison

How to simplify the comparison

These “fixed” costs may seem insignificant on the card, but must be considered in light of the duration and the total amount that is requested, therefore other things being equal, those with a slightly higher Tan but fixed zero accessory costs or much lower. To simplify the comparison, all you have to do is go to compare the Taeg (whose definition is the global effective rate), and obviously prefer the lower one.

But the most important (and simplest) advice is to always read very carefully the conditions proposed by the bank for the stipulation of the consumer credit contract, so as to avoid unpleasant and unexpected surprises later on.

 

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