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Consumer Credit – why is it popular?

In the financial market, the financing of current personal needs in the form of consumer loans has recently expanded. A financial consumer can apply for a consumer loan to a bank, but also to a non-banking institution, such as a repayment company that offers money in the form of a loan. Banks provide a special-purpose (eg housing, car purchase or other agreed purpose) and non-purpose consumer loan, in which the bank does not care how the client wants to use the borrowed money.

In the financial market, the financing of current personal needs in the form of consumer loans has recently expanded. A financial consumer can apply for a consumer loan to a bank, but also to a non-banking institution, such as a repayment company that offers money in the form of a loan. Banks provide a special-purpose (eg housing, car purchase or other agreed purpose) and non-purpose consumer loan, in which the bank does not care how the client wants to use the borrowed money.

How can two different consumer loans be compared?

How can two different consumer loans be compared?

You can compare them using the annual percentage rate of charge. The APR is a percentage and determines the total cost of a consumer loan – ie not only the declared interest, but also the fees associated with the loan. The APR allows you to compare the cost of a consumer loan you are considering with the cost of other consumer loans offered by competing installment companies or banks, although each has a different strategy for allocating the cost of declared interest and fees.

The APR is therefore one of the basic information that the creditor (bank or installment company) is obliged to provide to the consumer when offering a consumer loan. This information must also be included in the consumer credit agreement. If it is not specified in the contract, the consumer loan is considered interest-free and free of charge.

Early loan repayment

Early loan repayment

Make sure that you have the option of repaying the loan before the agreed maturity date, without the consent of the bank or repayment company. You will reduce the total costs associated with consumer credit (interest plus fees). In no case does the bank or non-banking institution have the right to require you to continue to pay interest for the period after the early repayment of the loan.

Credit agreement and its requirements

Before signing any contract, read its contents carefully and pay attention to all paragraphs (especially those written in small print). The loan agreement must be in writing. If it is not in writing and was concluded only orally, it is invalid.