Repay a loan in advance, refinance the debt or compare between several entities, are some of the tips to pay less for your credit or loan. However, we will have to take out the calculator to find out if we are able to carry out these operations and estimate if the fee savings exceed the management costs and commissions.
How can we pay less when applying for a loan or loan?
Currently, there are many strategies you currently have to pay less money for the granting of a loan. Whatever its purpose: for consumption, personal financing or facing unforeseen expenses. Next, we will give tips to pay less for your credit: compare several loans before deciding, reduce the amount or term of credit financing, refinance the debt or cancel the loan in advance.
Compare among all loans and credits in the market
A very repeated phrase when you are looking for financing is “I’m going to ask my bank to see what it offers me.” This is not enough. There are more than 50 loans from 20 different entities that we must study in detail before deciding. With the E-Money loan comparator, you can find out the interest rate, commissions and links of all the loans in the market in just 5 minutes.
Request only the amount you need
When a loan is requested, you only have to ask for the money you need for your project or unforeseen. It is not advisable to request additional money “just in case” or “to have a mattress” since it is not free money, much less.
The first effect that you will notice in the balance of your checking account is that you will pay less money for formalization expenses, especially if the contracting of the loan has an opening commission, which can be around 1% of the requested amount.
Reduce the financing term
In the same way, as with the loan amount, it is important to choose the term that exactly matches your needs. Banks apply higher interest rates to loans that are requested with ample terms, but also, a broad time horizon ( 36 months or more) will grow your interests exponentially.
Refinancing the loan with other debts
Another alternative is to refinance the credit under a new financing product in which other lines of credit that you have contracted (mini-loans, mortgages, etc.) are collected.
All accumulated debts would be concentrated in a single installment, but with substantially different conditions. These types of loans are known as ” loans to reunify debt .” Not all banks offer this type of credit and it is complicated that even your current bank accepts the operation.
Do not forget that granting loans is one of the bank’s most profitable businesses, so if they finally gave the OK to the operation, you would be in a position to improve the interest rate of this new loan, change the maturity term or the installment with the objective of paying less when paying a single loan instead of several.
Credit early repayment
Early amortization of credit is one of the most effective and easy to apply methods. There are two types of early amortization: amortization to reduce quota or amortization to reduce the term.
By reducing the term, you end up before paying off the loan and, since time is the variable that increases the interest of the loan, it means a greater saving than you can achieve by reducing the loan fee. The advantage of this second option is that you reduce your level of indebtedness, with the possibility of requesting a new loan when you need it.
Early repayment of the loan has a drawback:
Cancellation or early amortization fees. Law 16/2011 of consumer credit contracts in its article 30 sets the limits of the commission for early amortization:
The entity may not charge more than 1% of the amount reimbursed when the period between early repayment and the expiration of the contract is longer than 1 year. In the event that this period does not exceed one year, the commission may not be more than 0.5% of the amount reimbursed in advance.
It is advisable to check the money you will save by requesting an early repayment of the credit to see if it will be profitable or not to perform this banking movement since it is not the same to develop it under a very high amount to another scenario where you have few fees left for your expiration. On the other hand, it will be necessary for you to detect if you have the necessary conditions to amortize it (additional income, money from inheritances, gambling or other unforeseen).