We often decide on cash loans at the time of unexpected expenses, or on which we are not able to put down money much earlier. Probably the most common purpose is simply to renovate the apartment. But sometimes these are simply goals related to our dreams.
Although we do not have any difficulties getting a cash loan, we can even say that we are very eager to reach for this financial product. However, this does not change the fact that we do not like debt. Even if we have some obligations, we want to get rid of them as soon as possible. And how do banks relate to our willingness to settle debt ahead of schedule?
Repayment ahead of schedule
It would seem that there is nothing better for a bank than to regain its money so that it can be turned again. However, for banking, it is not so obvious. Besides, in banks’ offers we often have reservations that the early repayment is possible only after a certain period of time. Other branches are again expecting to pay an additional commission on this account. No wonder that a kind of rebellion is born in us. In the end, we think that we do a favor to a bank outlet that we are overzealous clients.
The first installments with interest
The answer to the question why not all bank branches are satisfied with this fact is hidden in loan installments. Well, the first of them consist mainly of interest. And interest is nothing more than just pure earnings for the bank. If we choose equal installments, we will pay back the major interest part and the lower the capital part first.
Only at the end of the loan these proportions are significantly changed. The last installments consist mainly of the capital part. Do we now understand why banks insist on paying at least half of the installments on time, and only later can you allow yourself to settle your debt ahead of schedule? When the capital itself is ready for repayment, the bank does not have to worry that it will incur any losses due to early repayment. Or they will not be so high to make any bigger problems because of it. In financial comparison sites we find such cash loan offers, in which we can reckon with the comfort of early repayment without incurring additional costs.