When comparing competitive loan offers, we usually pay the most attention to the total cost of the loan and make the final selection based on this. Of course, the cheapest loan is not always the best one – it all depends on the point of view. Another loan will be chosen by a client who needs money for another, and another one for whom time is not a priority. The situation is similar for customers who cannot boast of a flawless credit history. Regardless of which group we belong to, we should know well what exactly the loan cost consists of.
Total cost of the loan – installment loan calculator
By far the best way to find out how much money you have to pay for a loan in a particular company will be to perform a simple simulation. You can do it directly in the office, but a much faster, more convenient and more often used solution will be to use the calculator available on the website of the selected financial entity.
Such a calculator can be found, for example, on our home page (or on the right side of the screen), so you can verify the total cost of the loan in just a few minutes. Then determine the total cost of the loan you need in just two steps – choose the amount you are interested in and a convenient repayment period. As you can see, calculating the total cost of the loan is very easy, of course, provided that we are dealing with a transparent and trustworthy entity, which you can read more in our previous article.
Interest, commission and additional costs, ie the total cost of the loan
What elements make up the final price of the loan? Usually these are interest, commission and possible additional costs.
Interest is nothing else than the price of the loan. The percentage that the lender calculates from the amount of capital borrowed. This is called nominal interest rate on the loan, usually significantly lower than the real interest rate, about which we write more below.
The commission, in turn, is the fee charged by the lender for granting the loan and completing all activities that involve it. Its amount varies, as does the repayment method – some entities charge a commission in advance, ie when signing the contract, some add it to the loan amount and collect it in monthly installments. Considering the fact that the commission amount is often quite high, the second solution is in most cases the preferred form of commission settlement by customers (we also use it).
Additional costs are all associated costs that the lender adds to the loan amount. These may be the costs of establishing additional collateral or insurance, which are used by some banks and loan companies (you will not find any additional costs in our contract). If you decide to use the offer of another entity, carefully verify the additional costs, as they can significantly affect the total cost of the loan.