Are you about to ask for a loan but it is not entirely clear how they calculate interest rates and what are you going to pay? Then, listen to your inner voice and if it gives you distrust, I asked for more advice.
Knowing what we pay interest each month for a loan is essential to get an idea of how much the loan costs us and we will have a more complete view of how it is structured. We will also be able to know how much weight the interest has on the total loan .
In this article we will try to explain how the interest on a loan is calculated so you can choose the best option for your pocket.
What do I get charged when I apply for a loan online?
Applying for a loan can lead to paying various expenses. For this reason, we recommend you to be attentive and to see what are the concepts that help you calculate your loan so you can avoid having surprises later.
Fortunately, credit information in Argentina is available to everyone, because the Central Bank obliges all institutions to give accurate information about their products.
So the information for you to calculate your loan is at our fingertips! We just have to know how to interpret and understand what we are talking about.
For this reason, before asking for the money , we have to look at the interests and commissions that we are going to pay. The most frequent in our country are the following.
Annual Nominal Loan (TNA)
What can be translated as the nominal interest rate expressed in annual terms.
- Annual Effective Rate : is the interest rate that calculates the cost or expected value of interest in a period of one year. That is, it is the interest that will actually be applied to the loan.
- Financial Cost Annual Nominal Rate (CFTNA) : this is the percentage that reflects the annual cost of the loan provided plus all expenses, insurance and taxes that are settled in your summary. That is why this index is even more complete than the one before calculating a loan.
- Commissions: In addition, it is necessary to know if the granting of the loan entails the hiring of other products that may be more expensive, such as a checking account with commissions, payment protection insurance, etc.
Therefore, if we are between two online loans and we do not know which one to choose, we should compare the Total Financial Cost of each one since it is a much more complete measure of profitability than the TNA because it takes into account the possible commissions or expenses that can apply to us
So how do I calculate my loan?
Once we have all the information about the loan (interest, commissions, associated expenses, etc.) you can compare different loans and choose the one that suits you best.
In order to calculate the loan we can use simulators to know what we are going to really pay for the money they leave us and how the amount we are going to pay varies depending on the time in which we return the loan . The simulator will show all possibilities. In addition, as indicated by the monthly fee, it allows planning the return time.
We hope this article helps you when choosing your loan . Do not hesitate to communicate for any question.