Interest payment is a mandatory condition for lending and the largest component of all overpayments. But to accurately calculate all costs, you need to take into account other payments - real and potential. We tell you what an overpayment on a loan may consist of, how to calculate it and whether it can be reduced.
What is included in the overpayment?
The list of possible costs depends on the type of product. It may include:
insurance. Insurance is mandatory for mortgages and car loans, but can also be taken out for classic consumer cash loans - for example, when the borrower has a bad credit history and wants to increase their chances of approval;
commissions for additional bank services - for example, for mediation saudi arabia mobile database in the execution of transactions, real estate appraisal for mortgages. Some credit institutions have a commission for reducing the interest rate. Although the service itself reduces overpayments, the commission should still be taken into account as costs;
penalties and fines for late payments. It is difficult to guarantee that you will be able to make a payment on time every month. And for every day of delay, your costs increase, albeit slightly;
commissions of other banks and terminals if you make a payment through them.
It is worth mentioning separately the costs of a credit card. This is a special credit product, because it allows you to not pay interest at all, and if used wisely, even earn money. But if it comes to overpayments, they can consist of the following costs:
interest for using the limit (if the grace period is exceeded);
service fees;
fees for SMS notification services;
fees for additional services (for example, increased cashback);
cash withdrawal fees;
transfer fees.
The biggest overpayments are usually on mortgages, a little less on car loans, and even less on non-targeted cash loans. The smallest expenses are on credit cards when used correctly. But if you go beyond the grace period for a long time, the card can become an extremely unprofitable product.