Consolidation loan, Arrangement Loan, Repayment fee – Explanations of more common loan terms
Loans are associated with many different terms that can cause confusion and confusion.
We have compiled a list of common terms and their explanations in this article.
Most loan companies charge a fee for taking out a new loan, called an opening fee or withdrawal fee. A settlement fee or commission also means the same thing. The bank or loan company adds this cost to the loan capital at the time of the drawdown. Thus, the customer’s account will always be paid the amount corresponding to the loan offer. The loan opening fee varies from a few dozen to hundreds of dollars. If you are thinking of paying off your loan in a short period of time, you should pay special attention to the amount of the opening fee. You always have to pay the opening fee regardless of the loan period, but you can influence the amount of interest by paying off the loan quickly. If you withdraw a loan in several installments, the withdrawal fee will usually be charged separately for each withdrawal.
Increase in fee
When you have shortened the existing donkey for some time, several companies offer the possibility to apply for an additional loan, ie to increase the amount of the loan. This will give you access to more loans from the same company and will be charged a premium on the price list.
Sometimes there are situations in life where you need a little extra money. If you already have a loan, you can negotiate a grace period with your current lender. Repayment free means that you do not pay the monthly installment of the loan in that month. The unpaid monthly installment will be added to the main loan and will be repaid in the coming months. Depending on the company, the use of grace months either extends the remaining loan period or slightly increases the monthly installment for future months. Repayment leave can be taken 1-2 months a year, and usually not for consecutive months. The repayment-free period is also called tax-free.
Account Management Fee
Banks and finance companies, as well as credit card companies, charge a monthly account management fee, which is added to the monthly down payment. The account management fee is usually a few euros per month. The amount may seem small, but if you have multiple loans, you may pay hundreds of euros a year just for account management fees. Combining loans will solve this problem.
Also, a collateral loan is the same, that is, a loan used by a customer to pay off smaller loans than they currently have. The purpose is to facilitate the management of the loan and, in particular, to reduce the monthly loan payments. Combining loans is usually always a good idea if you have several smaller loans. The cost of an individual loan can also be re-competed and paid off with a new, cheaper loan. Use a consolidation calculator to find out how combining loans can lower your monthly payments.