About credits comparison

Comparing loans

Lenders charge different fees and set rates differently, so it is hard to spot the best loan at a glance. Loans should be compared not by the advertised rate but by the figures that reflect the full cost: the annual percentage rate (APR) and the total amount to repay. For the same amount and term, the loan with the lower APR is cheaper.

Why the nominal rate is not enough

Many people make the mistake of comparing loans by the nominal interest rate alone. It shows only the charge for using the money and leaves out fees, which can increase the cost of a loan considerably. The most common fees are:

• Arrangement fee — a one-off charge when the loan is issued. Its size often depends on the loan amount.
• Account fee — a monthly charge, usually a few euros. On a short loan it is barely noticeable, but over the years it adds up to a significant sum.
• Withdrawal fee — for credit lines: a fixed amount or a percentage of the amount withdrawn.

So always compare the annual percentage rate: it includes both interest and all mandatory fees. The APR depends on the loan amount, the term and your credit history, so compare offers for the same amount and term.

What else to look at

• Total amount to repay — the clearest indicator of how much you will pay in the end.
• Monthly payment — it should fit comfortably into your budget.
• Early repayment — whether you can repay the loan sooner and whether there is any compensation for doing so.
• Late payment penalties — they are not included in the APR but matter if you run into payment difficulties.
• Lender reliability — whether the lender is licensed by the supervisory authority in your country and what its reviews say.

In the EU, a handy tool for comparison is the Standard European Consumer Credit Information form. The lender must give it to you before you sign the contract. It sets out the amount, term, rate, APR, all costs and the total amount to repay in a standard format, so offers from different lenders — even from different countries — are easy to put side by side and compare.

How to use comparison sites

Comparison sites, including AllCredits, help you quickly see offers from many lenders in one place. But keep two things in mind. First, no such site lists every lender on the market. Second, many comparison sites, AllCredits included, earn money from affiliate links: if you take out a loan through a link, the site may receive a commission. This does not change the cost of your loan, but always make the final decision yourself after checking the terms on the lender’s website. Learn more about how our catalogue works on the About us page.

A lender’s offer does not oblige you to anything, but don’t apply to many companies at once: every application is checked against your credit history, and many checks in a short period can harm it. It is better to compare terms in the catalogue first and apply to the one or two lenders that suit you best. For lenders by country, see Credits in Latvia, Credits in Europe — North & West and Credits in Europe — South & East.