If you are evaluating cash loan options, you should consider three important points in your analysis. In this article you can not only know what these points are, but also note their importance in a practical example.
To understand the importance of some factors to consider, the best way is to set an example. This is the case of the so-called Super Cash Credit from Good Finance Bank, which offers 3,000.00 soles of capital loans. It establishes 48 monthly payments of 153.32 soles.
What factors should you consider when applying for cash loans?
The three indicators that you should consider to evaluate cash loans are the following:
Annual Effective Cost Rate (TCEA)
The Annual Effective Cost Rate, or TCEA for its acronym, is the main indicator of the cost of a loan. It includes the interest rate corresponding to the loan, plus the extra commissions and associated expenses. This indicator determines the payment for the loan that you will have to make in each monthly installment.
In the example, at the end of your payment you will have canceled 153.32 * 48 = 7,359.36 soles, which is equivalent to 7,359.36 / 3,000 = 245%. Then they will have paid 100% of capital, and 145% of TCEA. That is, in interest, extra commissions and associated expenses will cancel more than the capital you obtained on loan.
Amount of fees
The amount of fees is another determining factor to consider when applying for cash loans. It may be that a monthly fee of 153.32 soles is convenient to cancel given your income level. But if you consider that you will cancel it for 48 months, in total you will pay 7,359.36 soles for a 3,000 loan.
Real payment capacity
You should consider your real ability to pay, when applying for any type of loan, including this type. The amount of 153.32 soles per month, may or may not be significant to your personal budget, depending on your ability to pay.
Remember that the ability to pay is not only given by your income, but also by your expenses. That is, to your income you must deduct your expenses, plus the payments of other debts that you may have.
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