Personal Loans and when should you apply for one?by Admin | August 23, 2021
Are you thinking of taking out a personal loan? We tell you what is the NIR and APR and how you can take advantage of the money you receive to pay off your debts or enjoy your summer vacation.
There are times in life when we need a little financial boost to make our dreams come true. From buying a new car for the family to living a vacation at the height or solving an unforeseen expense before it becomes bigger; in all this a good personal loan can help us.
With personal loan the bank makes available to the borrower a certain amount of money with the legal promise that he/she will pay it back together with interest within the stipulated term, with installments or periodic payments. In the document that it signs all these variables are gathered so that it can be informed of which are the conditions to which it is going to commit itself.
The monthly payment, for example, will depend on three factors: how much money you have requested, how long you are going to pay it back and what interest rate it has. Depending on your answers you will be able to predict how much money you will have to pay to make your investment profitable. Do you want to know how to get the most out of your personal loan?
The personal loan: what is the NIR and the APR?
When deciding whether you are interested in a personal loan, you need to know two terms that decide the interest rate of your credit: the NIR and the APR. These will indicate the profitability of the process from the beginning to the end, to evaluate if we are really making a profit on what we are going to buy with the money from the personal loan.
NIR: the Nominal Interest Rate is an indicator of how much the bank charges us for lending us the money we will need to carry out the project.
APR: the Annual Percentage Rate is a measure that indicates the annual cost of a loan, taking into account both its interest (NIR) and the cost of the origination fee and the cost of its associated products (insurance, cards, etc.).
The APR is a more reliable and complete indicator, so it is always advisable to use it to know the real value of different products, from a loan to a mortgage or even a deposit or investment fund. Ultimately, it is a gauge that helps you compare different offers and decide on the one that best suits your financial situation at any given time.
The personal loan: what do I need it for?
There are many reasons why you might be interested in taking out a personal loan, either because you need to plan for your future or simply because you don't want debt to end up affecting your monthly bills. In this short list we present you with some good ideas so that you can start preparing everything you need in order to enjoy your loan without any problems:
A vacation trip. Living as a couple or having the family nearby is an excellent occasion to schedule trips during the summer season. Decide on a local or foreign destination, go on an adventure with backpacks on your back and don't worry about money while enjoying the best views of the city.
Help with your studies. A degree, a master's degree, an extracurricular course… Those of us who have children know how difficult it is to organize budgets so that everyone in the house can access the best educational offer, so we are grateful to have an option that takes us by the hand in the most complicated moments.
A furniture purchase. Renovating the furniture in a house can be another great reason to take out a loan, because sometimes we have a closet or a bed frame that we need to change. The children's room, the living room, the kitchen… Make an inventory of the house and decide if it is a good time to make this home equipment for the future.
A new car purchase. If you are going to change your car, because you want to get an electric car or you need to expand the space for the family, you can also enjoy this money when you need it. However, think well if you want to finance a new or used vehicle, because it may be more convenient the second option in case you are not going to use it very often.
Whatever the reason for taking out a personal loan, you should be aware of your financial situation to know if you can meet this bank commitment. Analyze your financial health and seek professional advice if you need it to have all the details well tied up.