Credit is a familiar component of modern life. They are offered almost everywhere: in banks, shops, boutiques, and firms. Any building and finishing materials, expensive clothes, household appliances, televisions, computers, furniture, a car and an apartment - all this and much more can be easily borrowed. You can, of course, exert yourself and save the necessary amount, but the neighbor already has THIS, but he lives no richer than you, and he has the same salary.
Demand creates supply. Bank lending programs are diverse, and their list is growing every year. It is easy to get lost in this variety, it is very difficult to determine the advantages of a loan in one bank and its difference from other offers.
To begin with, a bank is a commercial organization whose main goal is to make a profit. It would seem that the annual interest on the loan is a sufficient profit that the bank receives from the borrower. But not so simple. At each bank, any loan is accompanied by commissions, which are not usually taken to “advertise”. The client learns about the existence of some of them, having already signed a loan agreement or having paid the first payment, knows about others in advance (for example, a commission for servicing a loan), although he does not understand their purpose.
So, what kind of commissions can be prescribed in the loan agreement in small and large print? The following commissions exist : commission for granting a loan, commission for reviewing a loan application, commission for servicing a loan, commission for opening and maintaining a loan account, commission for early repayment, etc. There are quite a few names of commissions, and the legality of levying most of them in 2009 was recognized by the state as illegal. The banks agreed, and ... changed the name of the commissions.
Before receiving a loan, the credit manager of any bank is obliged to familiarize the client with the effective interest rate. This rate includes interest and all bank commissions. The main debt is the body of the loan, that is, the amount that the client takes from the bank. Annual interest rate - monthly loan interest. Commission for servicing a loan and other bank commissions is an increase in bank profits due to overpayments that are difficult to explain. If the commission is taken only once upon receipt of a loan, this will not increase the total loan amount too much. Another thing is if this commission is a fixed interest on the full amount of the loan, and will be charged on a monthly basis, then the overpayment on the loan will be a very impressive amount.
Commission for servicing a loan is one of the most frequently charged commissions of banks. The name may have some variations, it may accrue for the entire loan amount or balance, be monthly or one-time. All previous commissions can be included in this commission, since all commissions are called upon to “service the loan”. The fines that banks take for late repayment or incomplete repayment of the monthly loan amount can well be explained by the reduced risk of the bank. Explaining other commissions is much more difficult, if at all possible.
Since banks can be fined since 2009 if they charge fees to borrowers, most large banks canceled almost all fees. Now "borrower life insurance" has come into fashion, which seems to be voluntary, but somehow not quite. Since the bank often increases the interest rate for refusing insurance. Not to mention compulsory car or home insurance. Life insurance can be paid once for the entire loan term and at its full cost, or you can pay annually for the balance of the main debt.
The natural conclusion suggests itself: no matter how they struggle with the commissions of banks, they will always exist in one form or another, under different names and in different volumes, since the temptation to make easy profit is very great.