Are you hurt by a flexible loan, instant loan, consumer credit, credit line, lump sum or credit card and don’t understand how big your first bill is? The low-interest rates in the dollar area and the high mortgage repayment morale of Finns combined with high-interest rate instant loans and flexible loans have created a situation in the loan market where there are dozens of credit providers and an infinite number of credit products.
The real APR guarantees a cheap loan, right?
The confusion of terms and the lack of clarity of credit terms have created a veil where credit transparency has suffered. The conditions have to be studied in peace to avoid unpleasant surprises. Still, nothing can replace common sense, calculate the cost of a quick loan or a consumer loan yourself before borrowing. How much interest, withdrawal fees and other monthly costs you pay for the loan product you want.
Bidding on your loans at Good Finance makes it easier for you to find the order of the loans quickly.
According to the law that came into force in 2013, the effective annual interest rate may not exceed 50% + USDibor for loans of less than USD 2000. According to the legislature, a higher interest rate ceiling was not required for larger amounts, since larger amounts could not be competitive at such high-interest rates. The amendment aimed at extinguishing quick loans. The decision of the Parliament was irrational and detached from the overall situation in the loan market.
In addition, the legislature’s lack of understanding of how to calculate the APR in relation to practice is obvious. Or what sounds like a $ 100 instant loan, where the $ 15 expense after a month’s repayment period raises the cost of a quick or flexible loan by a thousand percent compared to a $ 10000 consumer credit, with 49% APR in its first year to nearly five thousand dollars. Which one would you take? Which is a more significant risk for the national economy?
The effective annual interest rate is the best benchmark for loans with a long repayment period and a relatively high loan amount. For roughly over $ 3,000 and three-year loans, the formula starts to make sense. For smaller instant loans and flexible loans, the total cost of borrowing fluctuates according to the ratio of the different types of costs, and the formula does not fit comparably with ongoing loan agreements.
The formula for calculating the annual percentage rate of charge
The effective annual interest rate assumes that the loan is renewed every month if the loan period is short. In particular, this increases the apparent price, ie the annual percentage rate of charge, of soft loans as such. The annual percentage rate of charge includes:
- Nominal interest,
- Lifting and / or opening fee,
- Monthly account management fees and billing fees,
- All other recurring costs associated with servicing the loan.
The calculation rule includes the full cost of the loan. You can read the actual APR, its calculation formula and an example in the APR.
What to replace the real APR?
When applying for a loan, always calculate the initial cost of the loan yourself. Think about how much you pay for opening fees, whether you keep your credit longer and mostly pay interest, or whether they need is quick and temporary. However, having a small and nominally expensive instant loan is the cheapest one-month loan period and a flexible loan can become cheaper if you do not know exactly what your cash requirements are when applying for a loan.
Use common sense to choose a loan that suits your needs and your finances. When applying for a loan from the Good Finance service, you will always see the actual annual interest rates on the loans and all the costs. You can decide for yourself which option is best for you. Easy, fast and absolutely free.