How to sign a loan agreement, not a sentence: the main tricks of banks
- Date of loan
- Full loan cost
- Payment Procedure
- Payment Date
- Bank charges
- Penalty for late payment
- Early termination of the contract
- Your rights are protected by law.
Credit programs provided by banks often take no more than a page and promise very favorable repayment terms. At the same time, the loan agreement does not fit in even 10 pages, it is frightening with terminology and a large number of points. While it is not worth the signature and the bank and the customer will not receive a loan. Often, lenders rely on legal illiteracy, haste and trustfulness of citizens and try to gain as much power as possible over borrowers, adding to the contract favorable points. How to avoid impressive debt and what you should pay special attention to?
It is often advised to read the contract carefully, without haste, delve into and ask questions. This is all true, but you can get confused in terms and not distinguish between adequate legal requirements and cunning tricks.
Date of loan
It is worth to stay on the date of the loan. This is the day from which interest begins to accrue. The date can calculate the day of transfer of the amount or the day of crediting it to the account of the borrower. The first option is beneficial to banks, the second - to you. Banks are required to transfer money no later than the next day, but confirmation of operations may take from 3 to 5 days. Moreover, you have the right to refuse a loan in part or in full only until the date agreed in the contract.
Full loan cost
In addition to interest on loans, banks may charge various fees and impose unnecessary services on you. The law obliges lenders to calculate the full cost of the loan, taking into account all additional services. This amount is always in the loan agreement and it is for her to evaluate the attractiveness of loan programs, while future borrowers often look only at interest.
The contract may appear annuity or differential payment. Do not be afraid of these words, to figure out which one suits you just enough.
Annuity payment means that the amount of monthly payments is unchanged throughout the term of the contract. The plus of such a payment is that you only need to remember this figure and no difficulties will arise. The downside for you, as a borrower, is that for the first time (a year, and maybe several years), most of the payments will be interest on the loan. This means that saving will not work. In the last month of payment it may turn out that a rather large amount remains to be paid. This is the main debt. To avoid trouble, carefully read the payment schedule.
Banks prefer annuity payment because they are insured against loss of interest in the event of default by the borrower. Moreover, the income from the loan is higher.
Differential payment has long been the only option available in Russia. The difference is that the amount of payments towards the end of the loan period gradually decreases. This is due to the fact that most of the payment is the main debt, and interest is charged on the entire loan amount. Less debt - less and interest. Choose this option if you are ready to pay large amounts immediately. Later you can save well on interest.
The operation of making payments takes place according to a simple scheme, but there is a point that is important to consider. The day when you deposit the amount of the monthly payment to your account is not considered the date of fulfillment of credit obligations. Only when the bank transfers money to the loan account, the obligation of the borrower is considered fulfilled. There may be a situation where you did everything in a timely manner, and the creditor credited the money later. Fines in this case pays the borrower. Therefore, it should be clearly stated in the loan agreement that funds are credited to the loan account no later than a certain day.
Be sure to ensure that you are not responsible for the extra bank charges associated with lending. This is one of the most common mistakes due to which borrowers lose money. A clear amount of costs is not determined by law, which means that banks can charge as much as they need, even if the amount of costs is higher than the loan debt. For example, a lender may oblige a borrower to pay all legal costs, if any. It is impossible to appeal or dispute this clause after signing the contract. The best solution would be to not deal with such a bank.
Penalty for late payment
Penalties are charged by all banks, only the amount of punishment varies. It is indicated as a percentage, and starts at 0.1% per day. Calculate in advance how much a delay will cost you a week. In some banks, fines are unreasonably high, do not sign the contract at 1.5% per day or at 370% per year if you are not sure that you can repay such a large fine.
Early termination of the contract
It should clarify the cases in which the bank has the right to terminate the contract unilaterally. If this happens, you will have to pay the entire amount, including interest and penalties, in a very short time (from 10 days to a month). Early termination of the contract is applied not only after serious breaches of the contract, but also in a number of other cases. For example, a bank may terminate a contract if you did not inform it in time about a change in your marital status, financial condition, and much more. It is very difficult to foresee all cases, but it is possible to protect oneself from risks to the maximum.
Your rights are protected by law.
Your rights are protected by civil law, the laws "On Protection of Consumer Rights" and "On Banks and Banking Activities". Do not allow banks to mislead you and sign contracts on the most favorable terms.