About credits comparison

Credits comparison

Banks often charge different fees when you borrow money, and so it can sometimes be difficult to determine which loan is the cheapest. When you compare loans, you should look at what the annual interest rate is, as this is the main factor determining how expensive or cheap your loan will be. The cheapest loan is the loan with the lowest annual interest rate, in which most of the expenses are in the form of interest.

Now there are many sites that supposedly compare loans, you submit one application and get several offers from different lenders. But it is worth considering that you will receive offers only from lenders with whom this site works, it is also worth considering the financial interest of the comparison site itself, there is not always confidence that you will be offered the best loan option, it may turn out that this option is simply financially profitable for the comparison site.

Loan offers received from lenders after filling out a loan application do not oblige you to anything. Therefore, it is worth applying for a loan from different lenders to get more loan offers and compare them.

How to choose the best credit?

To do this, you need to make a small analysis of loan offers and pay attention to some factors.

The cost of a loan is by far the most important factor to pay attention to. Many people make the mistake of focusing only on the nominal interest rate of the loan. However, the nominal interest rate does not include any loan costs other than the interest rate and the bank’s profit, it does not show the total cost of the loan.

The best indicator is the effective annual interest rate. The annual interest rate shows as a percentage all costs associated with the loan, including all additional costs such as account management fees, opening fees, or withdrawal fees.

The opening fee is the cost billed for the implementation of the loan, the amount of which depends on the size of the loan amount. The account management fee is an additional cost associated with the monthly repayment of the loan, a kind of surcharge for invoicing, usually a few euros, but with long terms, large amounts can accumulate. The withdrawal fee is either a fixed pre-determined amount or a certain percentage of the loan amount received.

Since loans involve a wide range of additional costs, when comparing loans, you should always compare the effective annual interest rate. The effective interest rate is a figure that says something about the total cost of the loan, including all interest costs and fees. The effective interest rate depends on the amount and term of the loan, as well as on your credit rating.