Many of us are wondering what cash loan to choose. We are most afraid of the moment when the contract with the bank is signed. We are concerned that we will read the contract carefully. Will the lender put in it any unfavorable conditions for us, which we will simply overlook. So we advise on what every cash loan agreement should contain and what to look for to avoid hidden costs.
What is a cash loan agreement?
This is of course a document that is concluded by the borrower and the lender, i.e. a specific bank. The cash loan agreement is divided into two parts. In the first one you can find its general conditions, i.e. even:
- total cost of credit,
- what is the interest rate on the loan,
- what will the money be used for,
- payment deadline.
You can also learn about the interest rate on the loan, or about general obligations and rights – ours and the bank’s. The second part of the loan agreement contains all necessary data about the borrower and the lender. These are primarily:
- borrower’s personal data
- borrower’s address
- company contact details
- Company tax number.
The agreement also contains information on solutions in the event of problems with repayment of loans. It can be a change in the loan policy or the granting of credit holidays. however, this option must be included in the contract.
What should you pay special attention to when signing a cash loan agreement?
Undoubtedly, the most important criterion, which includes every cash loan agreement, is the amount of money borrowed and the date by which we will have to pay the debt. Another important aspect that should be absolutely paid attention to is the interest rate on the loan. They are determined by the so-called Real Annual Interest Rate, i.e. APRC. This is really one of the most important indicators because it tells us about the total cost of the bank loan. When it comes to additional costs, it is also worth paying attention to whether the lender charges us a commission or a margin. You should read all the costs that are included in the contract very carefully, because it gives you the opportunity to determine if you can afford to pay back the loan without any delay. Of course, the loan agreement also contains our basic personal data, which must be carefully completed so as not to cause any complications in the whole process.
At present, many lending institutions want to know what the money we will borrow will be used for, so this information will also be included in the contract. Remember to always be honest with the lender, because this will allow you to easily go through all the formalities.