Cash loans, also called consumer loans, can be easily used for any purpose, which is often buying a car, renovating a home or organizing a wedding. The bank does not require a down payment or mortgage guarantee, which greatly simplifies the procedure for granting money. Another advantage worth mentioning in cash loans is the option of early repayment without paying an additional fee. Only some mortgages offer this option, because it is not known as the preferred way to finalize long-term cooperation with the bank.
However, compared to mortgage loans, the cash loan repayment period is much lower – for example, at USD 30,000, it averages 5 years. Lower loan value and shorter repayment period is associated, unfortunately, with higher interest rate than in the case of large mortgage loans. Additional expenditure for the applicant is a commission, the value of which can be up to 5% of the total loan amount.
Cash loan – in what currencies?
Unlike other types of loans, cash loans are only granted in USD, which is also considered a weak point of this product. Cash loan, like a savings account, is a pillar in the offer of financial products of each bank. For this reason, there is fierce competition between different institutions. Currently, there is a specialization on the market clearly displaying for commercial purposes selected aspects of providing “cash injections”. The segmentation of the target customer group has revealed that some of them expect low interest rates above all, while some pay more attention to the maximum loan amount.
How do you choose the right cash loan?
Choosing a good cash loan is first and foremost to determine which issue is most important to your client. When choosing a loan, various factors are important, such as: loan amount, loan insurance, option to increase the borrowed amount, faster loan repayment and assumed repayment period. All conditions are selected individually to meet the needs and possibilities of the credit advisor. There are institutions on the market ready to provide support in the amount of USD 100,000, which may please a significant number of interested parties.
It is worth noting that some banks provide the minimum loan amount, informing that the maximum value depends on the customer’s creditworthiness. Other customers, in turn, will be satisfied with the sum of cash loans in the range of 15,000 to 30,000, “hunting”
What is the interest rate on cash loans?
Since the issue of interest is presented as a weakness of this product, banks in various ways try to overcome the resistance and reluctance of customers before spending at the level of 1/5 of the sum of borrowed money. The interest rate on cash loans is related to such issues as repayment period, installment amount and total sum of funds received, so it requires calculation. It is worth familiarizing yourself with the term ‘real interest rate’, as it is the basis for estimating real costs. In general, the current interest rate on cash loans ranges from 15% to 35%. Of course, banks do not shy away from the suggestion that a way to reduce the interest rate is to get a larger loan.
Some, in turn, tempt you with the option of not collecting a commission, which you must always consider using a calculator (sometimes you can get better when paying the commission). It is good to know that the method of presenting a bank offer has recently taken the practical form of a calculator, thanks to which you can have a preliminary understanding of how much you will pay. For many reasons, a cash loan has the opinion of a product addressed to people who need a quick injection of cash and do not want or cannot lose months of banking formalities.