Bank loans: how to choose the best interest

Bank loans are loans granted by banks to individuals or companies in exchange for the recognition of an interest rate.

Bank loans are loans granted by banks to individuals or companies in exchange for the recognition of an interest rate.

Over the last few decades, banks have developed new financial products to offer their customers, but this type of loan remains an important component with which to consolidate its customers. Loans of this kind fall into the category of personal loans, ie fast loans without a specific purpose: the consumer can then use the amount received as he sees fit. On the contrary, other bank loans, such as mortgages, constrain the resources disbursed to a specific use (in the case of a mortgage, the purchase or restructuring of a property). In general, when money must necessarily be used for a predefined purpose, one speaks of purposeful loans.

So how can choosing a bank loan be convenient? First of all, an analysis of the main characteristics of a loan is needed, those that determine its cost, so as to then be able to compare the various financing offers. The easiest loan cost to identify is the weight of the individual installment : this depends on various factors, from what has been obtained by the bank to the duration of the amortization period, to the frequency of payments, which is usually monthly, but can also be bi-monthly or quarterly.

However, the main cost item to consider is the interest rate . In fact, when a loan is repaid, not only the capital obtained is repaid, but also an additional sum made up of interest. If you want to calculate the rate of a loan, in fact, the main measure of this expense is the TAN, nominal annual rate , which indicates as a percentage how many interests you pay in a year. However, to understand the convenience of a bank loan, the TAN is not enough: it is also necessary to consider the APR, annual percentage rate , which considers all the accessory expenses necessary for the opening and management of the loan.

In fact, the bank, before lending the desired amount, will have to carry out numerous checks, starting from the guarantees presented by the consumer, which can be of various types: from the pay slip that guarantees a stable income to a property to be mortgaged. These checks are part of the expenses, such as the preliminary investigation, which the bank supports before granting the loan. This is why the APR is a more faithful measure of the cost of bank loans.

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