Due to the multitude of loans and consolidation loans, it is often difficult for us to choose the best option. Banks that advertise their products give their benefits and get lost in everything as if in the fog. Some offer attractive nominal interest rates, while others offer a low commission. Is the best consolidation loan a cheap loan? Or maybe there are other factors that distinguish good consolidation.
A way to get the best consolidation option
Of course, it can not be unambiguously stated that a given commitment is the best consolidation loan. If that were the case, then most probably customers would conclude contracts with one institution from the banking sector that offers such a product. However, as I know well, every bank wants to earn money on the consumer, which is why he uses various tricks in his marketing that are interested in offering his credit or loan offer. What distinguishes a good consolidation loan:
- reasonable rate of the Annual Real Interest Rate (APRC), because it is primarily the decision on the cost of the loan itself. The higher it is, the more expensive it will be to pay for its credit obligations. The cheapest consolidation loan has a relatively low real interest rate, that is RRSO. Unfortunately, to find out how much we really are, we are forced to focus our attention on what is printed in a small print on a given bank’s website. Banks promote low nominal interest rates, which are usually listed at the beginning in bold rather than APR. The table below compares the ratios of APRC with cash consolidation loans in the largest commercial banks in Poland
- length of the loan period – usually the best consolidation loan has a sufficiently long repayment period, so that it would be competitive from the existing ones, which are the time to repay the consolidated liabilities. Because if it is extended accordingly, our monthly loan installment will be correspondingly lower. It is also worth noting that the longer the repayment period of the consolidation commitment, the lower the APRUS ratio.
- maximum loan amount – although this is important information for us, this feature is not as important as the previous one, with the exception of mortgage consolidation loans. Some banks offer such solutions up to the amount of 90% of real estate, which means that they do not require a large own contribution, unlike those that offer a loan of 60-70% of collateral.
- the possibility of applying for an online consolidation loan, which significantly shortens the whole procedure of applying for given financial liabilities. Thus, it helps us find the most convenient loan option
These characteristics only together will guarantee success when choosing a consolidation loan. Although the best consolidation loan rule is the cheapest loan, it is the most faithful reality.