If you have big plans, such as buying a property or renovating a home, but cannot rely on your savings, a loan can be helpful – provided it's a suitable loan for you.
From the multitude of financing offers, choosing the most advantageous one can be a real challenge. The fear of making the wrong choice and the complexity of the loan application process can also be stressful factors that can complicate your steps.
Here are 5 of the most important characteristics of a suitable loan to consider before making a decision:
1. Doesn't overburden you financially
A suitable loan is one where the monthly installment is affordable without excessive financial strain. The maximum debt-to-income ratio accepted by most banks is 40% of your monthly income. However, it is recommended that the monthly installment does not exceed 30% of your income to provide a safety margin.
How can you ensure this? Make an honest calculation of your monthly income and expenses. Then, using a mortgage loan simulator, you can get an estimate of the maximum amount you can borrow.
Do you need a larger sum? There are solutions. In the case of a mortgage loan, you can try to save more for a down payment. Or you can consider bringing in one or more co-borrowers – family members or close individuals who will share responsibility for repaying the loan with you.
2. Has a favorable interest rate
There are no loans without interest, but some interest rates are more reasonable than others. Interest significantly influences the total cost of the loan, so it is recommended to compare as many loan offers as possible before making a decision.
To do this efficiently, you can seek the help of a credit broker, who has immediate access to dozens of offers, some with better interest rates or new offers that are not yet in the market. From all these options, they will select the one with the most competitive interest rate that suits your financial situation.
3. Meets your criteria
To access a loan, you need to meet specific eligibility criteria. Typically, these criteria consider your age, income, length of employment, and the ability to make a minimum down payment. The flexibility of these conditions can vary depending on the bank or financial institution providing the loan.
Fortunately, there are many financing offers available, so it is not advisable to settle for the first one. You can receive assistance in selecting offers and finding a loan that meets the conditions and requirements you have without accepting a higher interest rate or making other compromises to obtain the loan you need.
4. Offers flexibility in repayment
Whether it's a mortgage loan or a personal loan, the option to repay the loan ahead of schedule can provide you with more financial flexibility. If your situation allows, it is recommended to repay the loan as quickly as possible, thus paying less interest.
For partial early repayment of the loan, it is recommended to choose a reduction in the loan term in favor of reducing the monthly installment. Refinancing can also bring advantages by obtaining better loan terms. Early repayment or refinancing at the right time can significantly reduce the interest on the loan, both the one corresponding to the monthly installment and the total interest.
5. Is managed responsibly
A loan is a long-term commitment, typically spanning from several years to several decades. Good financial planning is essential throughout the loan period, not just before taking it, but immediately after accessing it. You will need to ensure that you can always meet the monthly installments.
If you find yourself unable to do so, it's a good idea to have a backup plan and be aware of your options – refinancing the loan to get a lower rate is one of them. A credit expert can assist you and guide you through the loan process to make the right choices.
A prudent and well-managed loan is a tool that, when used wisely, can help you achieve your goals or take the first step towards them without jeopardizing your financial stability.
If you still have things to do and clarify to ensure you make the right choice, you can seek specialized assistance. With the help of a credit broker, you can have instant access to various loan offers and be directed correctly toward what suits you now and in the future. A credit broker is not just an intermediary in accessing a loan; they can be a trusted ally in managing your loan from the beginning to the end of the loan period.
According to Government Emergency Ordinance No. 52/2016, this service is completely free for consumers. The profession has been rigorously regulated, making collaboration with an authorized credit broker a safer and easier way to access a suitable loan.
Comments