In Poland, all kinds of loans and credits are very popular financial products. Many of them use, but not many know how to do it responsibly and safely, so as not to get a financial loop around your neck. It is enough to follow a few simple rules that will present this text so as not to fall into the financial trap of excessive debt, which has often pushed people to finality.
The first thing to remember is that a loan or loan should be a last resort. It is worth considering whether there is a possibility, for example, to reverse the purchase, to finance it with own funds. Of course, this is not always possible, but if we can, it is better not to take out a loan and a loan, which involves increasing the cost of, for example, buying a TV set.
Look at the APY loan
Many people think that the best loan or loan offer is the one with the lowest nominal interest rate, but it is not. It is much more important than the interest to check the real cost of the liability and the APRC, i.e. the Real Annual Interest Rate. These are indicators that take into account, apart from nominal interest, all fees necessary to obtain a loan or a loan, for example for insurance. The best offer is the one in which the real cost is the lowest, and thus the APY, which shows the interest rate with included costs.
It seems quite obvious that one should compare a loan or a loan with those offered by other banks. Currently, there are many comparison websites and websites that create rankings of the best offers. As it was written above, the comparison of the real cost of debt is more important than the nominal interest rate.
Do not repay the loan with another loan
In addition to calculating the real cost and exact comparison of various offers, it is important to never pay off your liabilities with further commitments. This leads to the creation of the so-called a credit loop or a situation in which debts increase, to the extent that without incurring further obligations we are unable to repay them. This is a simple way to bankruptcy. The only exception to this rule is a consolidation loan, which is a special product, aimed at combining liabilities into one.
In summary, by sticking to four simple rules, you can avoid a very dangerous situation of over-indebtedness. Common sense and moderation in financing expenses with loans or loans, as well as wisely choosing offers, are an opportunity to avoid credit loops and other financial hazards.