Evaluating different alternatives before taking out a loan allows you to understand the cost of borrowing money and the commitments it entails. Before choosing an option, it is advisable to review the interest rate, the total financial cost (costo financiero total, CFT), the installments, the fees, and the contract terms.
A personal loan is a sum of money borrowed that is to be repaid in installments under certain conditions. Before taking out a personal loan, it is best to compare options and understand all the costs involved.
What is a personal loan?
A personal loan is a sum of money borrowed from a financial institution for a certain purpose, to be repaid under the agreed-upon conditions.
What to consider before taking out a loan
Before borrowing money (under a mortgage, pledge or personal loan), it is best to compare the options available at different institutions and particularly evaluate the following:
– Interest rate:
– Fixed: The rate will not change during the term of the loan.
– Variable: The rate may rise or fall depending on the agreed-upon benchmark.
– Total financial cost (CFT): It includes interest, fees, insurance and other charges. It is an indicator of how much you will actually repay.
– Term of the loan and number of installments.
– Fees: Some charges are not allowed, such as certain early-repayment fees.
Relevance of the contract
When signing a contract, you are accepting the rights and obligations contained in there. So, before signing:
– Read all the clauses carefully.
– Make sure the following information is spelled out:
– Terms and conditions of the loan.
– Rates and fees.
– Payment methods.
– What happens in the event of late payment.
Always keep a copy of the contract.
What happens if you’re denied a loan?
A loan application may be denied for different reasons:
– Insufficient income, as determined by the institution.
– Missing or inconsistent documentation.
– Your category in the Debtors Database of the Financial System.
If you want to find out about your category:
1) Enter the BCRA’s Debtors Database.
2) Type your taxpayer identification code (CUIT) or employee identification code (CUIL).
3) Check out whether you owe any debts, to which institutions, the amount, and your category.
If the information is incorrect, you should ask the reporting institution to update it or follow the steps indicated in “What can I do if my information in the Debtors Database is not up to date?”
