The basic criterion we use when choosing an installment loan is the installment amount. As borrowers, we want it to be as low as possible. It is normal if we want to repay the loan without any obstacles and not be exposed to the unpleasant consequences of non-repayment, including court and bailiff proceedings.
The amount of the loan installment will not always depend only on the amount of money borrowed. It is worth considering all the factors that will affect how much cash will leave our wallets monthly.
The cost of the loan is crucial
One of the basic components of a loan is of course its cost. Depending on the lender, you can expect different types. In installment loans, in addition to commissions and interest, most often we also have to take into account the preparation fee and the administrative fee associated with long loan management and repayment. It should also be remembered that the higher the loan amount and the longer the repayment period, the greater these amounts will be.
Some companies introduce fixed, proportionally increasing costs over the period of repayment. This is the case, for example, in Zaplo, where a loan of 5000 USD for 36 months will give an installment of 300 USD, while a twice bigger loan will generate a twice bigger installment – 600 USD. Usually, however, the costs will depend on how high the loan amount is and how long the repayment period is. Due to restrictions imposed on lenders by the Anti-usury Act, it will usually be that as the number of installments increases, the total costs will decrease. Let’s consider it on the example of Super Penny :
APRC for a loan of USD 10,000 with a repayment period of 12 months will be 156.13%. For the same loan, but spread over 24 installments, the APRC will already amount to 107.09%. Next, for 36 months it will be 78.56%, and for 48 months – 57.8%.
In the example above
We can see that a really long-term loan will be the most profitable for the client. Of course, the total costs will be higher than for a shorter period, but they will decrease as the repayment periods increase.
It is worth mentioning that in some loan companies, the amount of commission also depends on how high the creditworthiness of the customer is. A rule can be seen – the higher this ability, the lower the commission will be. Therefore, the loan installment will also be lower. A similar situation will occur if you borrow multiple times with the same lender – as part of a loyalty program, the commission can sometimes be reduced by up to 50%.
Installment loan for free from Provident
Provident is one of the first loan companies to introduce loans for free on the Polish market. According to the current promotion, a new customer can count on USD 15,000 to be repaid in four equal, monthly installments, of course, provided that each installment is repaid on time, according to the schedule.
In this case, the installment will only affect the amount of the loan – the loan is completely cost-free and the repayment period is always fixed.