When analyzing cash loan offers, it is worth paying attention to how we will pay the amount due. In the case of installment loans, two solutions are available: equal and decreasing installments. Both forms of repayment have their advantages and disadvantages. At the beginning let’s look at what the loan installment depends on. Later, we will go to the merits and check what our experts advise – will equal or decreasing installments be more beneficial for our budget?
Cash loan without certificates
It should be remembered, however, that interest on the installment interest is not the only element in the cost of the loan. As borrowers, we also pay for various types of insurance premiums (depending on the given offer), commission for the lender or administrative fee. There are also one-off costs of obligations, such as registration fee or preparation fee (contracts, consideration of the application, etc.). Anyone looking for the cheapest mortgage will carefully analyze all these components – to finally pay the least amount.
Variable installments allow you to pay interest lower
For many people, however, this method of repayment is not available because they have the creditworthiness that allows them to take out a loan for an apartment only with equal installments. In addition, equal installments are still more popular and trusted in Poland than decreasing ones.
Mortgage can also be repaid quickly
If you have previously chosen annuity installments. This is possible thanks to the option of overpayment of the loan. It consists in transferring a larger amount to the bank than assumed in the installment. This can be done in accordance with the loan repayment schedule or outside of it, but you must contact the lender before making an overpayment.
If the bank agrees to early repayment of installments
The customer may make overpayments. There are, however, situations in which the contract concluded with the bank prohibits early repayment of the loan or includes charging an additional fee for repayment of the loan before the deadline. Some banks include a provision in the loan agreement according to which only part of the loan can be repaid for the first three years – from 20 to 30%. Some institutions charge a commission for each overpayment which is transferred to the bank within the first three years of repayment.
Therefore, every customer should pay attention to the provision regarding the conditions for early repayment of the loan when signing the contract with the bank. An overpayment can become an additional cost of the mortgage, so if someone thinks in advance about repayment in advance, then you should be prepared to take on the commitment with decreasing installments. And if variable installments are impossible to take for some reason, it is worth to wait with overpayments until the time specified in the loan agreement as the time when we do not pay additional fees for early repayment.
A reverse situation than overpayment is grace period
It is worth checking whether the institution is considering temporary financial problems for its clients and whether it has appropriate solutions for this type of situation. If not, then not repaying for up to one month can have severe financial consequences.