Month: April 2019

Can retirees get a loan?

by Bonnie Morgan

It is no secret that most pensioners in Poland often lack money for monthly expenses, which with age, including due to their health condition they can only grow. However, on the other hand, the stability of the service received and no risk of losing it should place this group of people as potentially attractive borrowers for banks. But not for every pensioner this form of funding is available.

At first glance, banks treat pensioners as other clients. Thus, when applying for a cash loan, they must undergo a standard creditworthiness verification procedure. Some financial institutions, however, try to reduce these formalities to a minimum, because of the stability of the service received. Its documentation in a bank outlet usually involves the presentation of an identity document along with a payment benefit, a decision on granting a benefit or a certificate issued by ZUS / KRUS or other authorized body.

However, the determination of creditworthiness is the simplest matter. Most pensioners, if they do not have an overly burdensome credit history, they can count on a loan from the bank. The problem is that this applies to people aged around 70. In addition, the amount of such a loan in most cases can not be excessive and the repayment period should be excessively extended. Therefore, it is difficult to expect that a pensioner aged 68 will be granted a 20-year mortgage for PLN 300,000. However, it will be different when it comes to a cash loan of 5,000. for 8 years.

The options for getting a loan shrink with age.

The options for getting a loan shrink with age.

Around 80 years of age, it may not be possible to receive any funding in this way. Saving in such a situation can be a loan in parabank, which also perceives pensioners as good borrowers and often there are no upper age limits for submitting an application in this type of companies. However, here more flexible criteria for the allocation of funds are often associated with a multiple APRC. In both cases, a bank and a non-bank loan, one should also bear in mind the necessity to purchase additional life insurance, which naturally increases the costs.

Most banks treat pensioners as other applicants. However, there are institutions that have prepared a special offer for them. That's what he did Harkin Bank. The APRC of such a loan amounts to 26.49%, but this group of borrowers can count on co-financing in the amount of up to PLN 150,000 divided into 100 monthly installments. A person with the lowest pension can apply for a loan, and the bank does not check the credit history of the applicant.

Unfortunately, retirees often fall victim to cheaters. Seemingly attractive loan conditions can lead an older person into serious debts. Therefore, one should beware of submitting any applications through an unverified entity. A loan or loan application should be submitted at a branch of a bank or loan company that already has an established position on the market, and such a decision is always worth consulting with someone from the family or friends.

How much do you pay too much for your loan?

by Bonnie Morgan

Loans come in all shapes and sizes, this also applies to the interest that is charged for borrowing money. You can probably save a lot of money on expensive, long-term loans if you transfer them. Certainly if you are dealing with a sharply decreased interest rate after you have taken out the expensive loan.

Comparing interest rate differences can save money

Comparing interest rate differences can save money

To take out a loan you do not always have to go to the bank, or other financial institution, where you have been a customer for years. You better compare the interest of different loans and credit providers with each other. You will soon find out where you can take out the most advantageous loan.

Refinancing expensive loans

Refinancing expensive loans

Moreover, you can pay off many loans in one go with the money of a cheaper variant. However, you must bear in mind that you immediately terminate the expensive loan to prevent it from being registered with the CKP. To be able to take out a loan you must:

  • Find a lender who wants to borrow money for you cheaper. The lender will check if:
    • the requested loan matches your personal situation,
    • the loan matches your income and expenses,
    • you are registered with the CKP.

If you are known to the CKP as a defaulter, the lenders will usually not be willing to borrow your money.

Co-financing a loan in a mortgage

Co-financing a loan in a mortgage

You can sometimes transfer a loan to a second mortgage and pay less interest. The interest on a mortgage can be lower because the property serves as collateral. However, financial institutions will be reluctant to provide a second mortgage.

Avoid credit cards and are in red

Avoid credit cards and are in red

A credit card is very easy, but it also comes with a number of disadvantages such as: the balance must be settled in time to avoid high interest payments. Standing in red is built into almost every payment account and can be useful if you occasionally need a little more financial room. have. Hundreds of euros in red every month costs a lot of money. It is better to take out a cheap loan to repay such expensive forms of credit.

Points for attention when transferring

Points for attention when transferring

If you want to refinance a loan, you should pay attention to:

  • the amount of interest,
  • the conditions under which the loan is granted, such as
    • is extra repayment possible?
    • what happens to the loan if you die?

Costs of various loan forms

Loan form Characteristics Interest rate
Personal loan
  • fixed interest,
  • fixed and short term
  • depending on the market interest rate,
  • on average between 6 and 10 percent
Revolving credit
  • fixed maximum loan amount,
  • interest payment on withdrawn sum,
  • fixed monthly repayment period
  • fixed percentage of principal,
  • on average between 6 and 10 percent
Red on a checking account interest payment on withdrawn sum, 12 to 15 percent on average,
Credit card
  • annual fixed contribution,
  • interest payment on withdrawn sum
  • depending on the loan agreement
Deferred payment
  • sometimes free,
  • sometimes fixed or variable interest
  • depending on the loan agreement,

 

When can a bank refuse to grant a loan?

by Bonnie Morgan

The reasons why banks refuse to give credit may be a whole lot. In addition, this list changes depending on the financial institution we target.

Bad application filled out

Bad application filled out

The first problem that may arise is not, in spite of appearances, the assessment of our creditworthiness (although the time will also come for this), but the application has been badly completed. A long credit form usually contains a lot of questions about various matters. Unfortunately, the assessment of what is important and what is less depends not on us but on the bank to which we are heading. If, after neglect, we treat answers to questions that we think are trivial, but important for the lender, let's not be surprised if we miss our chances on good day.

Some people in this situation will probably go to a new facility. Mistake again. If we walk from the bank to the bank and leave their credit applications there, unfortunately some potential lenders may turn on a red lamp and a simple scheme: we desperately need a loan, that is, we do not have money, that is, we are insolvent. Therefore, after carefully reviewing the offers of banks (preferably online), you should choose one and file a very carefully completed application.

Who deserves credit?

Who deserves credit?

When the selection and filling stage is over, the time comes to verify our creditworthiness by a bank clerk. It consists of many elements and some of the criteria also change depending on the lender. For example, various banks approach the issue of maximum installments. In some facilities it can be 50 percent of pay, in other 60 or 70 percent. The basis, however, is to have this remuneration. An ideal situation for a bank is when it is dealing with a client with an employment contract for an indefinite period, who has been employed in a given position for a long time. Additional points can be obtained by married persons. Sometimes, however, banks require that a husband or wife agree to take a loan from their partner. However, it should be stipulated that this is not tantamount to the fact that the spouse will from that time be co-debtors or their creditworthiness will decrease.

They have slightly worse employment on a fixed-term contract. However, they are not in a lost position. Some banks check our employment not forward, and back. If, therefore, we have been in a given position for five years and the contract ends in a month, in some banks we will get a loan for several years. But more often you can meet with a situation where the lender will grant a loan only for the duration of the contract. This also applies to people who work on a contract for a work or contract of mandate. A client employed on this basis will usually be refused a loan, although there are also exceptions to the rule.

The bank may also negatively approach the industry in which we work. A person employed as a driver, builder, owner of a pawnshop, and sometimes even a politician can more often be refused than, for example, an employee of the post office. The creditor assesses some occupations in terms of its risk or possible collection of receivables. The latter applies in particular to persons working abroad. It does not matter that we earn a lot in England or the Netherlands. In Poland, taking eg a mortgage on this basis can be quite a challenge. And all this because of the banks' fear that in the case of non-payment of installments there will be a problem with debt enforcement.

In some institutions, they may also be skeptical about a self-employed person. For the lender it is a form of earning much more risky than, for example, a full-time job at the office. Applying for a loan in such a situation must very well document his earnings for the period appointed by the banking analyst. This, in turn, is associated with a lot of paperwork.

Seemingly, the group of dream candidates for obtaining a loan are pensioners. However, this is usually an obstacle here. The vast majority of banks give loans to a group aged 20 or more before the age of 70. Thirty-something girls, preferably settled, are preferred for large mortgages. Of course, as always, there are exceptions, and either an 18-year-old or a 75-year-old old man can get a loan somewhere. In this group, therefore, the greatest chance will be people with an early retirement or pensioner? In the power of age ?. However, it is different with periodic benefits. If the pension is only granted for a given period, one must take into account that the loan agreement will apply to the end of payment of the benefit.

Additional liabilities

Additional liabilities

Disqualifying in some facilities is also taking a quick time. Nothing is that paid off, it's important that it's taken, and that can mean that we were desperately looking for money. Similarly, taking too many credits in short time periods. Usually, this is done to satisfy the emerging financial needs. However, it can have negative consequences. Even if our creditworthiness allows you to incur another commitment, the lender may find that we are on the way to the credit spiral and then we will get a refusal. It is also worth remembering that the monthly amount of available free funds is the most important for the bank. High earnings are useless if you barely have enough for the first one.

The dreamed-for customer bank will therefore be a settled person, who has a stable and stable job, from which a lot of pay is left. On the client's side, it is necessary to select the facility properly and complete the loan application. Those who meet with refusal can look for happiness in non-bank institutions. Contrary to appearances, sometimes you can find loan terms there, not worse than a bank loan.

Refinancing costs for loan

by Bonnie Morgan

By paying off the outstanding balance of an existing loan, with the help of a new credit, you can sometimes be more advantageous. You can choose to take out the new loan with the same bank, or you can choose to do this with another financial institution. In addition to saving on borrowing costs, you can also change the original term or the monthly repayment terms of a loan by refinancing.

Refinance and save costs

Refinance and save costs

By refinancing you can choose to change the original loan. Shortening the term of your old loan is very useful because you can then save interest. However, if you want to spend more per month, it is better to choose to extend the term of the new loan. After all, you pay less each month and the costs will be distributed over a longer period.

Financial consequences of refinancing

Financial consequences of refinancing

When you decide to refinance you must take into account certain costs. Refinancing will therefore only be worthwhile if you know how to earn back the refinancing costs. By refinancing at the same bank you usually have to count on file costs and in addition the payment of a reinvestment fee of three months interest on the outstanding amount of money that you want to repay early.

If you prefer to refinance with another bank, you will also have to deal with extra costs. With this you can think of:

  • costs for the inspection: these are costs to remove the old mortgage registration from the register at the mortgage office,
  • costs for registering the new mortgage,

You can of course borrow the costs of a refinancing. However, such costs will not be tax deductible.

Moreover, when making a comparison, you must take into account all kinds of additional changes if you decide to switch to another financial institution. A loan from another bank can mean, among other things, that the conditions attached to the new loan differ from your original loan. This could mean, for example:

  • a more expensive debt balance insurance,
  • opening an account with the new lender,
  • direct debit from your salary,
  • the holding of savings.

Fiscal consequences of refinancing

Fiscal consequences of refinancing

However, a refinancing loan means that you can still enjoy the same tax benefits as with your original loan. When refinancing you must therefore always pay attention to the date on which the original loan was taken out. In certain cases, when you take out a refinancing loan, you can claim a higher basic amount (old housing bonus) as a replacement for a housing bonus loan.

Furthermore, a refinancing loan will not open a new ten-year term for the supplements. The loan for refinancing will then replace the original loan, so that the number of years that you are entitled to supplements remains the same.

Refinancing can only give you a tax benefit or loss if the term of the loan is changed. After all, a discount means that you will miss out on a tax benefit for a few years and by extending the term you can gain a few years of tax benefits (under the old system).