Student Loan: If you take a loan and do not understand all the nuances, you can get caught up in debt. We figured out the important issues of lending and chose life hacks that will help not to overpay for the loan too much.
- 1. The more documents, the lower the Student Loan rate
- 2. Insurance at the bank can not be taken
- 3. Spouses must agree to a loan
- 4. You must carefully read the contract and pay the loan
- 5. Making minimum payments is disadvantageous
- 6. The bank must be warned about early repayment
- 7. Credit can be divided upon divorce
- 8. In the current loan, you can reduce the rate
- 9. The bank needs to talk about financial difficulties.
- 10. Debts are inherited
1. The more documents, the lower the Student Loan rate
The bank will issue a loan at a low rate if it is confident in you. You must provide evidence that you are a reliable borrower.
- Positive credit history. Well, if you already had loans or credit cards in any bank, you regularly made payments and did not allow delays.
- Salary on a bank card. For salary clients, banks always have advantageous offers and low-interest rates on loans.
- Revenues. To confirm the official salary, bring a 2-personal income tax certificate and a copy of the workbook to the bank. Documents confirming your financial solvency will be useful: a certificate of registration of a car, a foreign passport, voluntary medical insurance or comprehensive insurance policy, bank statements from other banks.
2. Insurance at the bank can not be taken
Most often, along with a loan at the bank, they offer to buy insurance. Be sure to insure
- housing if you take a mortgage;
- the property, if you take a loan secured by it;
- life, if you take a mortgage under the state support program.
In all other cases, insurance is voluntary. You have the right to refuse it immediately or during the “cooling period” – within 14 days after registration of an insurance.
But many banks raise interest rates on loans if the borrower refuses voluntary insurance. In this case, the benefit should be considered. Insurance can be issued at any insurance company accredited by the bank, and not just at the bank. Compare prices at several insurance companies and buy a policy where it’s cheaper. Ask your bank for a list of accredited insurance companies.
3. Spouses must agree to a loan
By law, spouses may dispose of joint property at will. But this does not apply to loans and other debt obligations, the lawyer of Arbat ICA Vadim Bashir-Zade notes. When one of the spouses takes a loan, banks require the written consent of the second spouse. Consent must be certified by a notary. This usually applies to mortgages and loans for a large amount.
4. You must carefully read the contract and pay the loan
Read the contract before signing. Especially text that is written in small print. Take along a person who understands the financial topic and whom you trust. Clarify everything that is incomprehensible, ask questions to bank experts. Pay attention to hidden fees, commissions, interest, penalties.
One of the most important figures in the contract is the total cost of the loan (CPM). This is the amount of interest per annum that you will pay to the bank. It includes not only the interest rate, but also various commissions and insurance premiums. By law, UCS is placed in the upper right corner of the first page of the contract and is indicated in bold. Using the CPM, you can calculate the total amount of the overpayment on the loan.
Be careful when paying for a loan. Enter the exact minimum payment amount. The bank does not have a minimum amount of delay, and it charges fines even for a few cents. This will be reflected in the credit history and will cost you money. Make payments in advance, especially before the holidays and weekends, when the opening hours of banks change. Consider the transfer fee, if any.
Choose a loan with a low rate
5. Making minimum payments is disadvantageous
If every month you make only a minimum payment for a loan, you repay the interest first. And only a small part of the payment goes to cover the main debt. It is prescribed by law and beneficial to the bank, but disadvantageous to you. To reduce the overpayment on a loan, you must try to pay more than the minimum payment every month and pay off the debt ahead of schedule.
6. The bank must be warned about early repayment
Paying more than the minimum is called partially prepayment. In order for the amount to be paid in principle, the bank must be warned. For how long and in what form – each bank decides for itself.
The bank must also know in advance about full prepayment. Early repayment will be reflected in the credit history and may affect the decision of some banks to issue a new loan to you.
7. Credit can be divided upon divorce
By law, the total debts of spouses can be divided in a divorce. But only if they appeared in the interests of the family. This must be proved: to provide the consent of the second spouse for a loan and confirmation that the loan was taken for general purposes.
“If there is no consent of the other spouse, or there is evidence that the loan was taken by one of the spouses to their personal needs, the court may refuse to see the credit obligations”, – warns lawyer Vadim Bashir-Zadeh.
8. In the current loan, you can reduce the rate
Bank offers on credit rates are constantly changing. If you once took a loan at a high-interest rate, and now the rates have decreased, you can get a new loan, pay off the old one and pay less. You can also combine several loans into one. This is called refinancing. You can refinance a mortgage, car loan, consumer loan, credit or debit card debt (overdraft).
It is not necessary to refinance a loan at the same bank; you can apply to another, where there is a better offer. Each bank sets its own conditions: minimum and maximum amount of debt, loan term, insurance. It is important that you have a good credit history and no delays.
9. The bank needs to talk about financial difficulties.
If you have financial difficulties and it has become difficult to cope with a loan, tell the bank about it. He may review the terms of payment. This is called restructuring. For example, a bank can extend the loan term or allow credit holidays – postpone repayment of the main debt for some time and pay only interest.
The bank will not go to meet you if it considers your problems not serious. Therefore, be sure to attach supporting documents to the application for restructuring: a certificate of income reduction, a document of dismissal, a certificate from the hospital.
10. Debts are inherited
By law, outstanding loans are inherited, along with accrued interest and forfeits. In this case, the amount of debt may not be more than the value of the entire inheritance. “By virtue of the provisions of the law, heirs will be liable to the bank only to the extent of the value of the inherited property transferred to them, ” says lawyer Vadim Bashir-Zade. It turns out that if a person inherited 200,000 ₽ plus a debt of 500,000 ₽, he is obliged to pay the bank only 200,000 ₽.
“The heir will be liable only in case of registration of inheritance rights or actual acceptance of the inheritance, ” the lawyer said. If you abandon the entire inheritance, you will not have to pay debts.