Peruvians are constantly looking for extra money that can help cover personal or business expenses. In this scenario, financial institutions offer a wide and diverse range of available credits, and for this reason it is common for us to choose a type of credit product that is not the most appropriate for our needs.
In this sense, it is recommended that before requesting or accepting any type of credit, we analyze its information and characteristics in detail, to ensure that we choose the one that best suits our needs and expectations.
Next, Sergio Rivera, Commercial Manager at Experian Peru, shares these four recommendations:
- Determine the amount you need for your needs and expectations: Before choosing a loan, it is important to have defined how much we are going to request and for what. Many times we tend to choose an amount greater than what we need, which means that we will have more money to make unnecessary expenses. It is important to remember that in a loan you have to pay the money received in addition to the interest it generates.
- Define the payment term to which you commit: It is important to remember the basic rule of any type of credit – longer term, lower payment fee, but also higher interest. Therefore, it is advisable to commit to paying the highest possible monthly amount in order to mitigate interest and avoid ending up paying a much higher amount than the requested credit. However, it is important to calculate paying the credit in the fewest number of months possible, without affecting other components of our monthly budget.
- Review and verify interest: First of all, when the bank provides us with the corresponding interest rate, verify that this is the TCEA (Annual Effective Cost Rate), since it considers all the costs that the credit implies (commissions, interest, charges for use, insurance). , among others). Remember that the financial market offers various interest rates, and due to the number of options that exist today, it is a good idea to be able to analyze the rates available from the various financial institutions before venturing to apply for a loan. Even if you have a good credit score and profile, you can negotiate additional discounts with the lower rate.
- Consider payments on account: For credit card payments there are various facilities. In the first place, there are no penalties for prompt payment, so if you receive additional income, you can pay off the loan by amortizing the principal to reduce future interest. If it is possible to reduce interest, it is a good opportunity to also reduce the time of the loan.
Take these tips into account when choosing a loan. Remember that it is never advisable to apply for a loan to pay off a previous credit, since this will lead to a vicious circle that can lead you to be the holder of several simultaneous credits that you will most likely not be able to finish paying later.
