Through the loan agreement, the bank undertakes to transfer the cash amount specified in the contract to the borrower. The bank is the seller at the moment, that is, it sells us its product, which is a loan . As a salesperson, the bank wants to make money from its transactions, which is also granting loans .
In connection with the above, the borrower must pay more than he borrowed to the bank. We all know that. However, a surprise may be the fact that the loan is not only the amount of the loan and interest on the loan . Besides, whenever we talk about the loan agreement, the additional costs of the loan also appear. Thus, the loan is not only the loan amount plus interest due, but also the additional loan costs. Only all these elements make up the total cost of the loan that the borrower must return.
AMOUNT OF LOAN
The loan amount is the amount of money the bank gives us after signing the loan agreement. If we are credited with 5,000 PLN and that’s how much the bank transfers to our bank account, it is the amount of the loan . As mentioned above, the borrower must pay more than he gets to the bank. Therefore, it is logical that we have other components besides the loan amount.
As a rule, the loan is interest-bearing. The bank decides on the amount of interest on the loan. The statutory upper limit for interest that banks can not cross is set by law. In addition to the fact that the bank must be within these limits, it is free to set the interest rate on the loan. The amount of interest does not determine which loan is more advantageous. Choosing the most advantageous loan should not be guided only by the amount of interest. Often low interest rates look tempting. However, it should be remembered that apart from them, each loan also has additional costs which, when combined with interest rates, will give us the actual cost of the loan.
ADDITIONAL LOAN COSTS
Additional loan costs are non-interest expenses. As far as the law regulates the interest rate, in relation to the additional costs of the loan , there are no such regulations. Often, additional costs determine the total cost of the loan . The cost of an additional loan is a commission for a loan. The Bank charges a one-time fee for granting the loan . The bank may charge a loan service fee. Additional insurance costs also include insurance. In many situations, we can withdraw from loan insurance. However, it is worth considering it carefully. The insurance protects us and allows us to postpone the repayment of the loan due to sudden loss of income. These are the basic costs of the loan , appearing practically at every loan agreement. Depending on the type of loan, we can meet such a cost as, for example, wages for a notary public or a fee for entry in the land and mortgage register, etc.
TOTAL AMOUNT OF LOAN
The total loan amount is the sum of the loan amount plus interest and additional loan costs. Only the combination of all these amounts gives us a real picture of the amount we have to pay back.
APY that is the real annual interest rate expressed in percent. In order to select the cheapest loan the most quickly, it is enough to follow the lowest APRUS number.