It can be difficult to know what type of loan to choose if you are missing money on the account. Should you be a quick payday loan that you can make in a short time and where you have the money in for example. 30 days ago Or should you choose a normal consumer loan where the maturity often starts at 12 months and where the interest rate is significantly lower?
This can be a difficult decision and many considerations should be made before taking out a loan. Interest rates may not always be the most important thing to look at, because the longer you have the money, the more costs you will get overall. So there are many points and relationships to consider.
Can you pay off in 30 days?
The first thing you should ask yourself is how far you can repay that money in 30 days (quick loans) or prefer the longer maturity of months (consumer loans). Few people will be able to do this unless they are looking for money. For example, it could be through pay at the beginning of the month.
If not, the choice will quickly give itself. Then the alternative is a consumer loan where you can choose maturities of anything from 12 to 180 months. It is the most normal and you have great flexibility to choose the maturity that best suits your personal financial situation.
Interest versus total costs
Another important thing to keep in mind is the size of the interest rate versus your total cost. Unfortunately, many people know too little about finances and it is especially young people who have difficulties. Something that could at worst result in an RKI registration.
The fact is that your total costs are clearly the most important thing when choosing a loan type. It may well be the interest rate on a quick loan is 25% while it is 15% on your consumer loan. But in return you have the money for at least 11 months longer. During this period, many interest costs can now accrue.
So while the last solution may seem the cheapest on paper, this is not always the case. Therefore, try to pay special attention to the OPP and what the total costs are stated. If in doubt, you can always inquire before signing the agreement.
It is important to know what you are going for and here you can not just look at the interest rate, although it would be so easy! You also need to keep an eye on the total credit cost so you can assess what the solution will cost you overall.
Do you have very expensive debt?
If you have very expensive debt, it can eg. be from different quick or consumer loans. Then you should definitely choose refinancing as this will be the most sensible way to go. The principle behind is really simple, you get settled all your existing expensive debt and combined into a collectible loan from the same provider. This at a lower interest rate and where you will achieve significantly greater financial overview.
You don’t have to pay to 3-4 different creditors, but you just have to pay off one place and you save money by adding up. So lower credit costs, overall, are the primary benefit of refinancing.