Loan terms that are worth knowing
When applying for a loan, you can come across many industry-specific and often unspoken terms. Fortunately, you do not need to be an experienced financier, and you can understand what lies behind certain words.
What is the APRC talking about?
The total costs associated with the loan may include various fees, such as interest rates, commissions, preparation fees, etc. Loan offers can vary considerably in terms of these fees, which would make it difficult to compare them.
Therefore, all loan offers contain information about the APRC, ie the Annual Real Interest Rate. This measure combines all costs associated with a given loan and makes it easier to compare offers. Therefore, the lower the APRC is, the more profitable the loan is in financial terms.
There are even offers on the online loans market that have APRC equal to zero. This means that you pay off exactly the amount you borrowed. Although, offers of this type have some limitations and are usually only available in the case of the first loan in a given company for the maximum amount of several thousand dollar, they still remain extremely attractive, and taking them can therefore prove very profitable. Of course, you must remember that such a loan should also be repaid on the agreed date so that no fees are actually charged.
What is a verification transfer?
When applying for the first loan in a given company, you are usually asked to perform the so-called verification transfer, which amounts to a symbolic amount, eg USD 0.01. Its purpose is to confirm the identity of the person by comparing whether the date in the application form matches those of the person making the transfer. Therefore, the verification transfer performs the function of security and ensures that no one impersonates a person and does not try to extort a loan.
However, more and more loan companies are able to confirm their identity in an even simpler way than performing such a verification transfer. Instead, all you have to do is log in to your bank account and the advanced software will compare whether the date from your bank account is identical to those entered in the loan application.
How do debtors’ catalogs work?
When applying for a loan, you can often come across catalogs of debtors, eg KRD or BIK. The companies that run them deal with the credit history of citizens, so they collect information about what obligations a person had and whether they paid them within the deadlines set out in the contract.
The information contained therein is used by banks as well as other financial companies to assess the credibility of their potential customers on this basis. Date in the catalog of debtors are stored for many years and can effectively limit or completely prevent a loan from the bank.
Fortunately, among online loan institutions you can also find those who offer loans also for people who have negative entries in the debtors’ catalogs.
What is a loan refinancing?
Taking out each loan should be carefully thought out, and after taking it out, it should be repaid within the set deadline. Sometimes, however, unforeseen fortuitous events occur in life, due to which the timely repayment of the loan turns out to be very difficult or even impossible.
It is worth remembering that online loan companies are aware of this and often provide opportunities to solve this type of situation, eg by refinancing a loan. It consists in the fact that the loan originally taken out is repaid by another loan company in which the customer has just completed a refinancing loan.
As a consequence, the customer gets more time to pay off his liability, and the loan company changes, which should be returned. However, you should be aware that a refinancing loan involves additional fees, which is why it should be treated only as help in really difficult cases.
What is a non-bank loan?
Online loan companies are simply companies that specialize in borrowing money. Such institutions operate on the basis of legal provisions, including the Civil Code. In the case of banks, the situation is slightly different, because their activity is regulated by banking law.
A non-bank loan is a loan from an entity other than a bank, ie from a loan company operating on the Internet. A skilful and reasonable use of this type of offer can be very beneficial. A non-bank loan can be obtained faster and easier than a bank loan.