Cheap business loan? business loan? We will not find it so quickly, it is not difficult, but it is necessary to devote some time to it.
If we look only at the nominal interest rate on a business loan, the offers are extremely attractive and very cheap.
The maximum interest rate on consumer loans can not currently exceed 10%. and if we look at the offers of banks, this is the case.
Until a few years, a cheap business loan was fixed at 16% and even 25%. on a yearly basis.
(If we have expensive business loans, it may be more beneficial to use a loan or a consolidation loan. To find out if it is profitable for us, check the CONSOLIDATION CREDITS and contact your bank.)
So why, if it’s so cheap, we complain that it comes out… dear? The bank has to compensate for low interest rates and thus increase its earnings in a different way. You can add a high commission or loan insurance. Fortunately, banks are required to disclose the total cost of loans (not just cash) and their APR (Real Yearly Interest Rate).
Indeed cheap business loan
The nominal interest rate on a loan or business loan can be as high as 0.5%, but it will turn out to be expensive. A high commission for granting a loan or a loan, with a low interest rate and a short repayment period, makes such a loan expensive.
With a short repayment period, the commission, not the interest rate, determines whether it is a cheap business loan or a road. The loan price is additionally affected by insurance if we use it and additional fees.
In general, one can notice such a principle that if there is a low interest rate, then there are high remaining fees, and vice versa, maximum high interest rates, low fees (eg credit cards). These rules do not apply to non-bank business loans, where you maximize profits.
Banks MUST inform you of the actual cost of the loan
Fortunately, banks are required by law to provide information about the cost of the loan: the total cost of crediting and APRC with the credit parameters set. Therefore, we do not use advertising to determine if it is cheap or expensive credit, but you should contact the bank and source to know the details of the real credit costs.
Remember! Simulators of loan installments, even on bank websites, are ONLY… simulators. We will know the real parameters of a business loan when we contact the bank and this will assess our creditworthiness. And that is not the truth yet! As the FINAL loan conditions will be known only after submitting the loan application. Probably they will not differ from the previous version, but still it is worth remembering.
Comparison of business loans with the key to choosing a favorable loan
And it is the APR and the total cost of credit that allows you to compare business loans and choose a more favorable option. Both factors were carried out just to help us check the cost of the loan (not just a business loan) and compare many offers at banks.
The information form will contain all the information you need to help you compare loans and at the same time have the same form. Generally, you can write that the smaller the APY, the cheaper the loan is. The same is with the total cost of loans.
The total cost of the loan – the sum of all loan costs (interest, commission, insurance, administrative costs, etc.).
APY (Actual Annual Interest Rate) – the actual cost of the loan on an annual basis. This is a percentage expression of total costs, therefore it takes into account the total costs including the time in which this cost is incurred.