Consumer finance lines are booming. According to data, year-on-year growth is already over 30% and the stock of personal loans is growing no less than $11,000 million per month, surpassing any other type of credit. Knowing the commissions, pre-cancellation conditions and terms is the key to not making mistakes when taking out a loan. Although banks are very aggressive with these types of lines, there are some fundamental details to know before embarking on a loan with these characteristics.
Compare the Total Financial Cost
The interest rate charged by banks is only one of the components to arrive at the total cost. Then you have to add the administrative expenses, granting commissions and various insurances. It allows a much more homogeneous comparison between the proposals of the different banks. Entities are obliged to report it, even every time they advertise a certain line.
Think twice before embarking on a long loan
Of course, the longer the term, the lower the fee you need to pay. Nevertheless, overextending when you really do not need to will force you to pay more interest for much longer. If you think that one year is enough to repay the credit, do not extend. If you pay all the installments within the stipulated periods, you will not have major inconveniences to take a new one later.
Be wary of very cheap rates
Several banks have advertised personal loans at rates below 30% per year. You should be extremely cautious with this type of offer. It happens that they go hand in hand with very long loans, which exceed 36 months. For this reason, a shorter term is preferable, even when the rate is higher.
Take advantage of car pawn loan
The advantages of taking out Car Title Loan Atlanta are that you need a good credit score, the term is short, maximum asset value loan, customable, less documentation, faster approval, and others. You will have two options. One is that you mortgage the car and take the loan, repay, and take your car. Second is that you mortgage the car, pay extra fees, use the car as usual, repay the loan, and get debt free.
You can always pre-cancel, but it is very expensive
All personal loans offer an exit option, the possibility of canceling it before maturity. The problem is that it is very expensive. The cost can reach 6% of the principal owed or even exceed that level. One of the most frequent uses of personal loans is to use it to pay off the card at the end of the month. It is a logical behavior. However, it is not always the best solution.
Do not use personal credit for anything
Keep in mind that it is a more expensive option than other financing since there is no real guarantee. In recent years, many people have taken on debt with these types of lines. There are more mortgage loan options, such as Car Title Loan Atlanta. It is convenient to be clear about the destination of the funds and if there are other options in the market.