In recent years, banks’ lending policies have changed significantly. The change consists in the fact that the conditions for granting large amounts of housing loans have been tightened and access to small cash loans, also known as consumer loans, has been significantly reduced. Despite the fact that they are more accessible, in order to obtain them it is still necessary to meet a number of requirements concerning employment and earnings. Generally speaking, therefore, creditworthiness must be adequate. And even though all these formalities have to be fulfilled in order to obtain consumer credit, it is still a very popular financial product on the market. Every year Poles are in debt for about 30 billion USD and the vast majority of this amount are small cash loans for any purpose.
How much does consumer credit cost?
The cost of each credit is expressed in the value of the APRC (real annual interest rate). It is the total cost of the loan granted on an annual basis. In the case of cash loans, it usually ranges from 10 to 30 %. What is the total cost of the credit? First of all, it contains the bank’s margin, i.e. its earnings increased by the WIBOR rate, i.e. the rate at which banks lend money to each other. Together we call these two components the interest rate of the credit. Promotional offers may amount to as much as 4% on an annual basis, although there are even offers with zero interest rate. Moreover, the APR includes the bank’s commission for granting a loan and other costs necessary to obtain it. When comparing a few credits in different banks or even momentary credits in loan companies, it is always worth comparing the value of APR with each other, because it is this value that gives the most realistic and honest comparison.
How to get a consumer credit?
We mentioned at the beginning of the article that in order to obtain a cash loan we will have to meet a number of strict requirements. The basic thing is to have a valid ID card, because credit can only be granted to an adult person living in our country. In addition to providing all your details, we will certainly have to provide the bank with a certificate of our employment and earnings. This applies to professionally active natural persons. In the case of entrepreneurs, certificates from the office and the US will be required, and in the case of pensioners and disability pensioners we will have to present to the bank an appropriate document proving the benefit granted. The bank will also ask us about our current, fixed household expenses, the number of dependants and whether we have any financial obligations such as loans, credit cards, account limits or, for example, alimony. For larger amounts, our credit history will also be checked at the office. That’s why it’s always worthwhile to pay off your liabilities on time, so that you don’t have any problems with getting a new loan later on.
Only on the basis of all this information will the banking system, supported by an analyst, assess creditworthiness and decide whether to grant us credit. The ideal situation is when the bank makes a positive decision and we only have to sign the agreement and wait for the transfer of funds. However, it often happens that a bank analyst will negatively assess our ability to repay the loan. This decision may be final, or the bank will try to negotiate with us additional terms and conditions of granting a loan. This may include, for example, the option to take out additional insurance that will increase the cost of the loan or the need for a loan guarantee from a third party.
How do I find the best cash loan?
By the way, it is worth mentioning that we should not use the offer of the first better bank. The prevailing competition on the market has made banks fight fiercely for each customer and often use various types of promotions to maximally reduce the costs of granting credit. Small earnings compensate themselves by winning a customer and they hope that in the future they will bring the higher earnings. Therefore, in order to find the most attractive offer it is worth to use credit comparison engines available on the Internet. Thanks to such a solution, after entering the loan amount and the length of its repayment, we will receive credit calculations in the blink of an eye in all available banks. Such data as interest rate, commission amount, RRSO value, total cost of the loan and finally: the amount of the monthly installment will be listed. Thanks to such calculations we will be able to quickly assess which offer is the most attractive for us. It is also real in terms of financial liquidity when planning the household budget.