Installment Loan What is it? The Principles of Installment Loans
The client perceives the installment loan as a loan related to the purchase of a given product in a stationary or online store, where he can count on the formalities related to the purchase in installments. A cash loan is also an installment loan, because the repayment of our debt is usually made through repayment in monthly installments.
Nowadays, installment loans in the case of household appliances, building materials, furniture, cars in installments are very popular. In most stores, we find representatives of banks offering 0% as interest on the loan. And although this offer is an amazing promotion for us, it is worth paying attention to several factors during the installment loan decision, which can be found in the loan agreement in the case of 0% interest:
- in the case when the gross price of the item will be less than the loan amount, then a loan commission will be charged as well as a fee for insurance,
- APY that is, the annual real interest rate is the determination of the real interest rate purchase after passing all fees and commissions – it is not interest rate 0% and usually 22% or more,
- the contract should contain the actual amount of credit in our currency and the amount of the monthly installment. The monthly installment is much higher than if the price of the product is divided by the number of installments,
- insurance is another basic element included in the costs of each loan. If the client does not agree to the insurance, he will not be able to get a loan. The controversial issue is also related to the fact that the client, despite paying for insurance, is not really its owner and the bank that grants the loan, which in the contract transfers the Insurer’s rights to itself. In this way, the customer bears only costs and does not have any rights,
- the worst element is the lack of the submission of a personal signature, and only the consent to all entries. The applicant agrees to the declaration of submission to enforcement, loan costs, familiarization with the general conditions. We also confirm that all information provided to us has been legibly read. In addition, we agree to debt collection by external companies in the event of difficulties in repaying the loan.
So before buying a specific item, it is worth considering whether it is worth hastily making decisions on the installment loan. The market is currently bending from the goods so you will certainly not miss it for a week, a month or a year. Due to the fact that currently the customer market dominates, none of the clients should be fooled. Most importantly, it is worth getting acquainted with all documents before buying a good.