Pay attention to loan agreements
When choosing an ideal loan, its price is certainly an important factor. Therefore, many loan applicants are mainly interested in the interest rate and APR when comparing bids. Equally important, however, is the loan agreement and availability, clarity and clarity of the information that the company will provide.
With the new consumer credit act, the unreasonably high charges and various loopholes have disappeared from contracts, but there may still be thousands of differences in fines and sanctions for individual companies. It is also important to know whether you can refinance the loan or repay it early.
If you do not read the contract or do not understand it properly, you may become entangled in the loan and eventually agree to something that will not benefit you at all.
Basic financial terms
First, clarify the basic concepts. If you have no idea what the difference between a loan and a loan is, you can hardly orientate yourself in a pile of full-term papers from the finance world. Check out the websites of each company. Many have prepared a section for clients where they explain the basic terms they use in their contracts and documentation.
Consult the terms and conditions and loan agreement
When you are clear about financial terms, you can start reading the terms and conditions of the contract. Terms and conditions should be easily found on the web. With specimens, contract documentation is a bit harder to purchase. According to a survey conducted by People in Need, only 60% of companies are published on their website.
For others, you must contact them before you can access the contracts. However, this can be time-consuming and unnecessarily complicated at the stage where you are only comparing mortgage and consumer loans and you have not selected any specific ones.
Another problem may be the extent of contractual communication. Did you know, for example, that the bank could overwhelm you with more than fifty sheets of paper? It takes a long time to dig through this amount of information and it is not pleasant. The longer the contract is, the greater the risk that you will miss or misunderstand something.
A clear contract from Provident
A short and clear contract can be found, for example, at Provident. The aim of this non-banking company is, to be honest, and helpful to customers. It is betting on a transparent and fair approach, and this is clearly paying off. More than a million customers have used the company’s financial products.
For the customer, this means that he always gets accurate information so that he can understand the product in detail and thus make an informed decision. Of course, there is also professional service and the possibility to contact a Provident employee with questions at any time.
Well-arranged Express Cash documentation
Express Cash also prides itself on the clarity and transparency of contractual documentation. As with Provident, you can find a Code of Ethics on this quick loan website that explains the core values of the company.
The basis is fair dealing with the client and an effort to describe in detail the terms of the loan, the total cost and the amount of any fines and sanctions. Of course, these principles are also reflected in the implementation of the contract. All you need to do is to over 10 pages and you know what you are signing.
What must not be missing in the loan agreement?
Each contract is based on identification and communication data. It must not be closed without these. It should not be missing:
Furthermore, it must be determined how much money you borrow and how you repay the loan. The number of installments and their amount should not be missing either. The APRC and the interest rate should be clearly indicated. For the interest rate, you need to know whether it is fixed or floating or determine the length of fixation. All expenses together should then be included in the annual percentage rate of charge. This is not always the case. Therefore, it should be accurately described what all falls within the APRC and what expenditure is excluded.
You should also be interested in what happens if you are unable to repay. Can you postpone the installments? Are there fines or periodic penalty payments? How does society address such situations? The answers to these questions should be outlined in the contract.
There must also be informed whether the loan is purpose-built or you can use it for anything.
Do you want to make your loan selection and study contracts even easier? Check out our charts of the best loans for this month. We evaluate not only the level of interest rate and APR. We also consider the credibility of companies and their approach to customers. Take a loan in our comparator and enjoy your money without hours spent on top of the paper.