In the last decade, Russia has seen active development of the banking sector. Loan programs are being developed for individuals, under which attractive conditions are established. Currently, every Russian who uses borrowed funds to solve financial problems is forced to learn the basics of banking in practice.
What does the loan amount include?
In 2008, the Central Bank issued a Resolution that obligated all banks operating in the Russian Federation to notify each borrower at the initial stage of drawing up an agreement about the full cost of the loan. Despite this requirement, some financial institutions continue to treat their clients dishonestly, sometimes forcing them fraudulently to pay hidden fees and unreasonably high interest rates. To protect themselves from scammers and preserve their savings, Russians must be well versed in all the nuances of lending.
The total cost of the loan is formed from many components:
- the amount of the loan issued;
- interest accrued for the entire period of the loan;
- commissions (for consideration of the application, for the production of bank plastic, for issuing cash);
- monthly fee for loan servicing, etc.
Employees of financial institutions calculate the full cost of loans in the form of annual interest. This value directly depends on the tariffs established by the bank, loan terms, frequency of monthly payments, but does not include the amount of penalties and interest for the client’s failure to fulfill obligations on time.
Insurance premium and other hidden fees
Today, most Russian banks strongly recommend that potential borrowers take part in insuring their solvency and life. Thus, financial institutions protect their financial interests from all kinds of risks. When an insured event occurs, they return their funds in any case, and therefore willingly lend to people who have accepted such conditions.
Attention! Most often, insurance policies are required for those credit programs that are issued without proper verification of the clients' integrity: quick loans; passport loans; cash loans; unsecured loans, etc.
In addition to the imposed insurance, potential borrowers may encounter hidden fees, which, as a rule, they learn about already in the process of repaying the loan. Their contracts may include:
- commission for issuing a loan;
- commission for early loan repayment;
- fee for additional services, etc.
Early repayment
Each client of a financial institution participating in lending plans to fulfill its obligations as quickly as possible, thereby saving on paying bank interest. Some lenders are loyal in this matter and allow borrowers to repay loans early. But there are also those banks that force their clients to pay for the desire to quickly repay their debts.
In order not to find themselves in a difficult situation, borrowers should be aware of several nuances of early repayment of loans:
- Restrictions set by the bank in relation to early payments. Many financial institutions prohibit clients from repaying loans early in the first few years.
- Some lenders apply interest rates not to the remaining balance, but to the original cost of the loan.
- There are established deadlines for making monthly payments.
- In addition to the main payments, loan funds are distributed.
How is the interest rate on a loan calculated?
To independently calculate the interest rate on a loan, potential borrowers can use special formulas, or use a virtual calculator posted by almost every bank on the website. If an individual can understand the intricacies of such calculations, then it will be much easier for him to communicate with the creditor and present his compelling arguments to him.
To calculate interest, you need to use three indicators:
- rate (interest);
- loan amount;
- loan terms.
This video tells you how to independently double-check the loan interest calculated by the bank. Borrowers will be able to use the video as a teaching aid, thanks to which they will learn how to carry out calculations that are difficult at first glance.
Annual percentage
The annual interest on a loan is a value that can be calculated and expressed in different ways. As a rule, it includes the totality of all overpayments on the loan that the client is forced to make within 1 year. This value is expressed as a percentage of the amount of the loan issued. It may change downward during loan restructuring.
The annual interest rate includes all kinds of payments, commissions and contributions, and allows the financial institution to resolve the following issues:
- Create a profitable repayment model for clients.
- Conveniently return your funds.
- Provide borrowers with conditions for accurate and timely fulfillment of financial obligations.
- Develop a clear monthly payment plan.
Attention! Microfinance organizations do not use annual interest rates when making calculations. In most cases, interest on such microloans is accrued daily, on the amount of funds used by the borrower.
How to calculate interest on a loan correctly?
In order to avoid mistakes when calculating interest on a loan, borrowers should know one important nuance - the formula involved directly depends on the type of monthly payment. Today, credit institutions offer their clients the opportunity to repay debts in two ways:
- Annuity payments are fixed amounts that do not decrease throughout the life of the loan.
- Differential payments are amounts that borrowers are required to pay monthly, changing downward each time.
The formula by which loan interest is calculated
To calculate interest on loans, the following formulas are used:
Before applying for a loan program, even in the most reliable Russian bank, a potential borrower needs to think carefully, study all the conditions, and give a realistic assessment of his financial capabilities. In the process of studying loan offers, individuals can independently calculate the interest that will be accrued on a particular banking product. Such calculations will allow you to choose the most profitable loan from a financial point of view.