Tag Archives: Finance

More than the Loan Itself: Deconstructing the Parts of the Cost of Borrowing

LoanDealing with debt, especially loans, is one of the most confusing things possible. Yes, the offer sounds perfect for your needs and not to mention the sweet price. But, as you go on paying the loan, the rate consistently changes. So, is this mistake on the part of the lender? Well, probably not.

Rapid Loans explains that borrowing money isn’t all about who offers the lowest interest rate because that’s just part of the overall cost. There are actually a lot of other payables if you carefully examine the details of the loan contract. That’s why it’s best to know the real cost of borrowing or making a loan first before committing to one.

The Compounding Parts of a Loan

Other than the interest rate you pay monthly, other factors add up. The actual cost of borrowing includes the following:

  • The Loan Baseline – depending on how high or low your loan is, there’s always a standard or flat rate. So, if you borrowed a below average value, you’re likely to pay the same rate with standard loan amounts.
  • The Loan Duration – the longer the repayment period, the higher additional payments you’re likely to pay.
  • The Repayment Mode – the standard mode of payment is monthly, which is an exact all-year round guarantee. But, there’s also the bi-monthly payment where you only have to pay 24 times a year.
  • The Type of Interest Charge – most loans have the Annual Percentage Rate (APR), which includes the total arrangement fees and charges. Always look at the APR to gauge the whole of your loan correctly.
  • The Transaction Fees – late payment fees, default charges, and other miscellaneous fees are always present in loan repayment. Remember to take them into account.

Some lender will have different structures that you should pay attention to. But as a standard way of making any loans, don’t focus only on low-interest rates.

Keep Track of Price Changes

Lessen Your Financial Woes

Keep Track of Price ChangesYou’ve probably heard countless times how you should always keep a budget, plan your expenditure, save and avoid impulse buying so as to avoid financial woes. True, these are quite the essentials.

Nonetheless, here are a few issues that make a big difference yet they’re often overlooked.

Keep Track of Price Changes

Prices in today’s markets change every other day. Keep track of the commodities you purchase frequently and those on your short-term and long-term budgets.

Doing this will help you take note of any price differences which will help you take advantage of that discount or holiday cut-offs. If prices go up you can postpone your purchase and save some more or find more affordable places.

One advantage of doing this is that you avoid going off budget and creating unnecessary financial emergencies because of over-spending.

Solve Problems as Soon as possible

Ever realised how a small unresolved problem can lead to multiple problems or one big problem that sets you off balance? In most cases, the problem is not keeping track of your finances, but having one too many emergencies that always throw your budget off-track.

Realise that, often, emergencies occur because of that missed deadline, the leak you ignored, procrastination, basically a thousand reasons you can’t deal with an issue in good time.

The solution to this problem is to create a to-do list, and a to-do later list. List down the things that have to be done sooner or later and make sure you set timelines for each task.

Utilise the Instant Personal Loan

For most people the word loan sends a shiver down the spine. Especially when you think of the high interest rates most loans carry with them. However, with instant personal loans, says rapidloans.com.au, there is not much for you to worry about.

True, there are those emergencies that are not self-imposed. Instead of struggling so much, why not take an instant personal loan. This type of loan attracts minimum interest rates, often requires no collateral and has friendly repayment terms.

Do not spend sleepless nights because of that financial hitch; deal with the issue at hand lest it graduates to a bigger, self-imposed emergency!