The loan consists of loan capital, interest and additional loan costs. The loan principal depends on how much money you want to borrow from the bank. This, based on our creditworthiness and financial standing, complies with the amount we apply for or sets another maximum amount that can be made available to us. The loan interest rate is also dependent on the bank. However, in this situation, the Act sets a maximum interest rate that cannot be exceeded. The situation is different to the additional costs of loans. In this case, banks have freedom in shaping what will be the additional cost of credit and how much they will have.
Additional loan costs – the most common:
The cost of servicing the loan by the bank
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The bank takes a fee for lending us money. By entering into a loan agreement, we buy money for money. No wonder that the bank as a seller wants to make money on its products. By signing the loan agreement, the borrower agrees to cover the additional cost of the loan, which is the loan service.
Theoretically, the customer decides about the cost of credit. In principle, credit insurance is not compulsory. In the case of low amounts of cash loans, for a short loan period, loan insurance may simply be an unnecessary loan cost. If we are sure that we will be able to repay our obligations without any obstacles (low loan installment, for a short period – up to 2 years), we can safely resign from credit insurance and thus reduce the amount of additional loan costs . In a situation where the loan capital amounts to a fairly large sum, loan insurance is an excellent solution. Moreover, the bank may make the granting of the loan conditional on it and stipulate that it will grant it only if we insure the loan. It is not only a security for us in the event of a significant deterioration of our financial situation, but also for the bank.
Entry in the land and mortgage register
In the case of a mortgage, the borrower’s additional cost must be the entry fee in the land and mortgage register. When taking a mortgage, we must establish a mortgage for a bank that lends us cash.
Notary public costs
In the case of a mortgage and the establishment of a mortgage by a bank, the presence of a notary public is necessary. His work is also paid and the borrower, of course, bears the costs.
These are just the most popular loan costs . Depending on the type and amount of the loan, there may also be other expenses which, according to the loan agreement, must be borne by the borrower.