Commission for servicing a loan or how much it costs to take a loan

Credit is a common component of modern life. They are offered almost everywhere: in banks, shops, boutiques, companies. Any construction and finishing materials, expensive clothes, household appliances, TVs, computers, furniture, car and apartment - all this and much more can easily be borrowed. You can, of course, strain and save the right amount, but the neighbor already has it, but he does not live richer than you, and his salary is the same.

Demand creates supply. Credit programs of banks are diverse, and their list grows every year. To get lost in this variety is easy, to determine the advantages of a loan in one bank and its difference from other offers is very difficult.

To begin with, a bank is a commercial organization whose main purpose is to make a profit. It would seem that the annual interest on the loan is sufficient profit that the bank receives from the borrower. But not everything is so simple. Each bank has any loan accompanied by commissions that are not accepted especially "advertise". The client will know about the existence of some of them, having already signed the loan agreement or having paid the first payment, knows about others in advance (for example, the commission for servicing the loan), although he does not understand their purpose.

So, what kind of commissions can be prescribed in the loan agreement in small and large print? There are the following commissions: a commission for the issue of a loan, a commission for reviewing a loan application, a commission for servicing a loan, a commission for opening and maintaining a loan account, a commission for early cancellation, etc. The names of the commissions are pretty much, and the legitimacy of charging most of them in 2009 is recognized by the state as illegal. Banks agreed, and ... changed the name of the commissions.

Prior to receiving a loan, a credit manager of any bank is required to familiarize the client with the effective interest rate. This rate includes interest and all commissions of the bank. The main debt is the body of the loan, that is, the amount that the client takes from the bank. Annual interest rate - monthly interest on the loan. The commission for loan servicing and other bank commissions is an increase in the bank's profit due to difficultly explainable overpayments. If the commission is taken only once when obtaining a loan, this will not increase the total loan amount too much. It's another matter, if this commission is a fixed interest for the full amount of the loan, and will be charged monthly, then the overpayment of the loan will amount to a very impressive amount.

The loan service commission is one of the most frequently charged commissions of banks. The name can have some variations, it can be charged for the whole loan amount or balance, be monthly or single. All previous commissions can be included in this commission, since all commissions are called to "service a loan". Fines taken by banks for late repayment or incomplete cancellation of the monthly loan amount can be fully explained by a decrease in the bank's risks. Explaining other commissions is much more difficult, if at all possible.

Since 2009, banks can fine, if they charge commissions from borrowers, most major banks have virtually canceled all commissions. Now life insurance has become fashionable, which seems to be voluntary, but somehow not quite. Since for the refusal of insurance, the bank often increases the interest rate. Not to mention the mandatory car insurance or purchased housing. Life insurance can be paid once for the entire loan period and at its full cost, and you can pay annually for the balance of the main debt.

It begs the natural conclusion: no matter how hard they struggle with the commissions of banks, they will exist in one form or another always under different names and in different volumes, since the temptation to obtain easy profit is very great.