How to choose the best loan, what are the criteria for selecting the cheapest loan? In a market crowded with offers, finding the one that best suits your needs is not easy. Let’s examine the criteria that allow you to identify the most interesting proposals.
How to find an affordable loan: TAN and APR
A first element to evaluate is the TAN. In order to be able to count on a convenient loan, it is essential to examine the Nominal Annual Rate and search for the proposal that provides the lowest rate.
This represents the interest rate set by the credit institution in relation to which the value of the installments is defined. The more contained the TAN, the lower, beyond expenses, the installment of the financing.
The TAN is, therefore, a pertinent criterion but not the only element to be considered to evaluate the effective convenience of the loan. In fact, incidental expenses are excluded from the TAN, which is instead reported in the APR.
How to choose the best loan: ancillary costs. In some cases, the credit lines provide for expensive ancillary costs. The main ones consist of preliminary costs, those of collection and installment management, to which must be added the stamp duty, the costs for closing the file, those related to communications and insurance.
In addition to the TAN, therefore, accessory costs must be considered. From this point of view, evaluation of theGlobal Effective Annual Rate, or the APR.
What is the APR? The APR is made up of TAN and ancillary charges. It is, therefore, a criterion for considering the actual cost of financing.
Insurance and guarantor costs: how they affect financing
What are the insurance costs? Insurance coverages are part of the costs that the person making the loan must take into consideration. There are mandatory policies and optional policies.
The insurance affects the installment but at the same time represents an important tool to deal with certain circumstances (disappearance, loss of a job, etc.).
How to choose the best loan: consider finding a guarantor. This allows for increasing the probability that the application will be accepted. The guarantor will sign the contract and will have to intervene if the beneficiary of the loan does not comply with the commitments of the repayment plan.