Nowadays people take loans for many purposes: purchase of an apartment, daily expenses, home renovation, new car or home electronics / appliances. Everything to improve the comfort of life. Often borrowers forget about one of the most important things – interest on borrowed money.
What is the interest?
Simply put, interest on a loan is the amount your bank earns from the cash you borrow. The amount of interest is influenced by many factors, including: time and type of loan, borrowed amount and interest rate. The greater the time, amount and interest rate on the loan, the more interest there is.
Each installment of the loan has interest and part of the debt in it – and that’s what we pay back. If the loan installment is fixed, the interest and principal amount is always the same. With decreasing installments, the sum of capital is fixed and only interest decreases.
In other words, these are statutory interest, which are calculated on bank loans, loans without BIK for the indebted, debit cards, etc.
The amount of capital interest is 5%, while the maximum rate can be 10%. In the event that the borrower is late with repayment for the loan, he must take into account additional fees. In this case, it will be interest for delay. Lenders or lenders always charge interest if they fail to pay on time, but the amount cannot be higher than the statutory maximum rates.
Details can be found in art. 359 of the Civil Code.
APRC – what to watch out for
The Current Annual Interest Rate Indicator is one of the most important elements for the consumer when choosing a loan. He talks about the borrower’s total cost. By law, an APRC inscription must appear on loans and borrowings. Non-bank loans attract their customers with the slogans “The first free loan with APRC 0%”. It should be remembered that this offer is mainly only for new customers of the company. It is very beneficial, because by borrowing, eg USD 1000, we give back the same amount, provided that we pay the liability on time. The largest amount for the APRC 0% at the moment is lite lender, where a new customer can take a free loan up to USD 5,000.
Calculation of loan interest
There are many online calculators on the Internet which will help us calculate the loan installment quickly. All you need to do is provide some basic information: loan amount, nominal interest rate, period and type of installments. As a result of the calculation we will get a list of the monthly installment. These are only demonstrative results, so the best way to calculate the loan interest is a personal visit to the financial institution where you want to take a loan. Specialists will prepare an accurate loan simulation for us.
What is the nominal interest rate?
A common mistake from ignorance is that the nominal interest rate is the total cost of the loan. And this is not true! APRC is the total cost of the loan, which includes interest per annum. The nominal interest rate is given as a percentage and it is the interest rate (per annum) according to which interest on the loan is calculated.
With this knowledge, we increase our awareness of various concepts related to loans and non-bank loans. Remember to borrow consciously – read carefully all information and costs related to your future financial commitment.