How to choose a bank loan in order not to overpay

Currently, banks offer a wide range of loan products depending on the purpose, availability of collateral, time for consideration of an application, loan terms, etc. How to choose the right product and not overpay for interest rates? Consider the bank loan and its types.

The main principle of lending: the higher the risk of default, the higher the interest on the loan. The risks are the borrower's loss of earnings, the source of income, loss, theft, damage to the collateral, the lack of a surety, the long term of the loan, the old or too young age of the borrower, and so on. Therefore, before giving out a bank loan, the bank seeks to minimize its risks by requiring a certificate of income, a copy of the work book, drawing up a pledge, attracting one or more guarantors, life and health insurance of the borrower (especially when issuing long-term loans), collateral insurance.

The most common bank loan is a loan for consumer needs. It is designed for the purchase of household appliances, building materials, electronics, cars, etc. It is divided into the target and non-target. Target consumer credit is issued exclusively for the purchase of a certain good or property, for example, a car, a residential building, for housing repairs, for education. For targeted loans, the interest rate is set lower than for non-earmarked ones, since the bank's risks can be reduced by issuing the purchased or repaired property as collateral.

If you need money for training, pay attention to the direction of lending such as loans for education with state subsidies (the total rate is 11.25%, of which the borrower pays only 5.06% for a period of study up to 10 years) and without subsidy (12 % Per annum for up to 11 years). List of universities participating in the program of subsidizing loans for education, approved by the Ministry of Education. Education rates are much lower than other consumer loans. In addition, there is a grace period for repayment of principal and interest.

Bank loan for the purchase of a car (car loan) differs from the consumer's target for the purchase of a car in that when it is registered as a pledge of a car is mandatory. To minimize the risk of loss of collateral, banks require to insure the car not only for OSAGO, but also for CASCO. PTS and a copy of the certificate of registration of the purchased car remains with the bank until the debt is fully repaid. Minimization of banking risks in this way allows setting lower interest rates on auto loans (from 14.5% per annum). In my opinion, if you buy a new car from an authorized dealer, you should choose a car loan with a subsequent pledge. The main reasons: a lower interest rate on the loan and low CASCO rates for a new car. In the first year of using this car, CASCO needs to be bought not only because it is an obligatory condition of the bank, but also for quiet sleep and driving. If the car is bought second-hand, the seller is a neighbor or an acquaintance, it is necessary to issue a consumer loan for the purchase of a car without a pledge. The interest rate will be slightly higher than that of a car loan with a mortgage. Under this bank loan requirements for the year of release of the car are established: it should be "no older" than 5-8 years (each bank has its own lending terms, I quote the most common ones). After purchase, the bank will need to prove that you purchased the car, and did not spend money on something else. Bring a PTA and a certificate of registration of the vehicle to the bank, the bank employees take a copy of the documents, the originals will return you. If you buy a car that does not fall under the above requirements, there is nothing left but how to make out a regular consumer loan or a loan for urgent needs. The interest rate for this loan product starts from 17-18% per annum subject to the presence of a surety.

The most popular and hard-to-reach for most residents of Russia is a bank loan secured by real estate (mortgage). This is due to the fact that interest rates on them do not differ so much from consumer targeted loans (from 12% per annum). Mortgage is granted for a long term, strict requirements are imposed on the solvency and age of the borrower. As noted in the Agency for Mortgage Lending (AHML), on average, the Russians draw up a mortgage for 17 years, pay off for 10 years. But even with the early closure of the loan overpayment is astronomical. Obligatory conditions for the mortgage: the availability of permanent work, pledge of the acquired real estate, valuation and insurance of real estate, an initial contribution of 10-15%.

If you want to save on bank interest, you should take care of your credit history, pay your monthly payments on time, try to apply for a loan in one or two banks, in which your credit reputation will be formed. Banks are given stable and reliable borrowers preferential loan rates and milder credit conditions. You can start your credit history by opening a credit card of a reliable bank with open lending conditions, without hidden commissions. With such a card, you can periodically pay off on current purchases and pay off debts during the preferential period, without paying at the same time for interest up to 50 days. Many banks "give" free first year card service.

Another tip for those who want to save on bank loans - try to take them to the bank, on the card of which you are listed the salary. The bank will not ask you for the salary certificate and the work book, and besides it will offer a preferential interest rate on many loans.