What to check before you sign a loan

Most people judge a loan by one number: the interest rate. It is the wrong place to stop. Two loans advertised at the same rate can cost very different amounts once the fees, the term and the small print are in the picture. Here is what to read before you commit.

The APR, not the headline rate

The advertised rate is built to make a loan sound cheap. The annual percentage rate is the honest figure, because it folds in the costs you would otherwise meet later. Put two APRs next to each other and, for the first time, you are comparing like with like.

The fees, added up

An arrangement fee here. A penalty for repaying early there. A charge if a payment slips. On their own they look minor; together they can turn the “cheaper” loan into the dearer one. Ask for the total cost of the credit, in money, across the whole term. Not a percentage. An amount.

A payment that survives a bad month

A repayment that fits comfortably today should still fit if your income dips or an unexpected bill arrives. If the budget only works when everything goes right, the loan is too big. Plan against the bad month, not the good one.

Who you are actually borrowing from

Check that the lender is authorised to operate where you live, and look at how it treats the customers it already has. A slightly higher rate from a provider you can reach beats a cheaper one that goes quiet the moment something goes wrong.

The clause nobody reads

Can you repay early without a penalty? After a missed payment, is there a grace period or do the charges start at once? These answers sit in the fine print, and they are the ones that bite months later.

Lining offers up side by side is the quickest way to see all of this at once. That is what Kreditano’s platform is built to do, in each country we operate in.