Many citizens actively use the services of banks. Financial organizations provide loans, deposits on which interest is accrued. This issue must be approached very carefully so that no further difficulties arise. If with a loan each client wants to get a low interest rate, then when investing their own funds - more profitable. But each bank puts forward its conditions for services. What is the interest rate and how is it calculated?
Definition
Many believe that if the percentage is 12%, then the entire overpayment is 12%. But this is not true, since this indicator is calculated for the year. If, for example, a loan is issued for 5 years, then the percentage is calculated for each year of using the money. It is charged from the remainder. The longer the loan period, the greater the overpayment.
With the execution of the contract should pay attention to the conditions. All financial institutions charge a different percentage. For example, MFIs calculate an overpayment for each day, and in banks usually for a year. What is the interest rate on deposits? This is the amount of profit that is accrued to the client for the temporary provision of money to the bank.
What affects the bid?
The interest is calculated based on the Central Bank rate. For example, if it is 8%, then no organization can lend money at a lower overpayment. Usually, banks provide services at a higher percentage.
There is a term like inflation. Every year there is a depreciation of money. If banks set low rates, they don’t make a profit.
What does the cost of a loan include?
The borrower needs to know not only what the interest rate is, but also what the loan includes. It is calculated based on:
- inflation rate: in Russia it is approximately 7% per year;
- the bank does not issue its own funds, for this it has depositors: for servicing deposits, funds that are included in the loan are required;
- in some cases, banks themselves borrow money from other organizations, and borrowers pay interbank interest;
- each bank has non-payers, which is also included in the cost of the loan;
- the bank takes into account its development: it needs to pay salaries to employees, cover other expenses, for which customers also pay.
Given these calculation rules, we can say what the interest rate is. This is a compensation of the bank’s expenses for its needs and for profit.
Low loan interest
Often you can find banks whose interest rates are quite low. Each borrower wants to receive funds so as not to overpay a lot. But even a small rate does not indicate that the loan will be cheap.
Bank advertisements always indicate the lowest interest rate per year. Such services are provided to only a few customers. In fact, this is an advertising move, and the borrower will know the real rate after leaving an application and providing documents. The percentage is determined by the solvency of the borrower, his credit history and other factors. With an increase in interest, the bank covers its risks by drawing up an agreement with the borrower.
A small bid indicates a lot. The bank will always receive its benefits, but the borrower has the following expenses:
- insurance premiums;
- fees for opening and servicing a credit account ;
- late fines and penalties;
- accruals for early repayment;
- paid SMS-informing and other services.
Before concluding the contract, you should carefully read the information that it contains. You also need to find out from the specialist what additional fees you need to pay the bank. Only conscientious payers have the opportunity to use low interest rates in 2016.
Maximum bid
In the banking sector, there is both a minimum percentage and a maximum. This is determined by modern law. A loan may not exceed 57.3% per annum. Over time, this indicator may change.
This rule applies to banking institutions, and microfinance organizations do not work on it. That is why the latter provide citizens with loan money at 500-800% per annum.
Bid Types
Bank interest rates are constant, especially for consumer loans and mortgages. They are determined before the conclusion of the contract, after which the client is given a payment schedule. On it and repayment is carried out.
But the percentage is also floating, which the employee is obliged to notify the client about before concluding the contract. This means that the lender himself decides to change the size of the overpayment. And it is the client’s responsibility to pay the assigned interest. Such conditions are usually valid for credit cards, which is not beneficial for the population.
How to install overpayment?
The setting of monthly payments is determined by the debt repayment system. It can be annuity and differentiated. In the first case, all amounts are equal until the end of the payment period. And with the second option there is a monthly decrease in the amount.
You can determine the overpayment on the website of each institution. To do this, there is a system of online payments, but specific information will be provided by the employee. Keep in mind that interest is not the final cost of the loan, banks also include fees and commissions. This can be determined by the loan agreement. Interest rates on deposits are also indicated in the document.
How to influence the interest rate?
Banks offer all customers different conditions, although the loan program operates alone. This is determined by the fact that the decision to issue a loan is made on the basis of the documents provided. But the final price of a loan depends on factors such as salary level, availability of security, credit history status, age.
To obtain favorable conditions, stable work with a high level of pay, a rich work experience and a good credit history is necessary. But when, for example, a borrower has early repaid loans, a large percentage can be set. The reason for this is the loss of profit by the bank if an early repayment occurs.
Marketing bid - what is it?
This type of bet is usually offered at car dealerships. Favorable 0%, which act as promises, do not apply to overpayment on a bank loan. The marketing rate involves receiving a discount on the goods in the amount of the money that would have to be paid to the bank. The purchase agreement shows the price of the car at a discount, and it is on its basis that the percentage will be calculated. Usually it is 10-12%.
If the indicator is not equal to 0, then a discount is given on the amount of the difference in marketing and bank rates. The dealer pays this money to the bank on the basis of an agreement. As a result, the buyer buys the car at a lower price. Only he should still take into account his finances, as well as carefully read the contract. Often, in such transactions, insurance is issued that have a high percentage.
Thus, if you want to get a loan, you need to familiarize yourself with the interest rate, as well as additional conditions. Some banks already include fees and commissions in the annual rate, and therefore no extra expenses will be required. But since the cost of the loan is important to the borrower, the latter option will be less profitable for him. Only if the client is satisfied with all the conditions can he draw up a contract.