Cost of credit: the different points to assess

With fixed rates at 2.40% * over fifteen years and 2.67% * over twenty years, the current context remains very favorable for borrowers. However, these conditions should not make you forget that other components are taken into account to assess and negotiate the total cost of your credit.

What is the total cost of a loan? The total cost of a loan is equal to the sum of all your monthly payments (plus fixed costs) minus the amount of capital borrowed. That is to say that it corresponds to all the cartoons that you will have to settle over the duration of your credit: to the interest calculated from the nominal rate of a credit are added insurance costs, costs and warranty fees.

 

Interest on credit

Interest on credit

Interest constitutes the largest part of the price of credit. This cost is a percentage applied to the amount borrowed. They are calculated from an interest rate, also called nominal rate. Currently, these rates are historically low and very advantageous, however it is still possible to negotiate them down. Hence the interest of bringing competition between banks thanks to the wise advice of a credit broker.

 

Insurance costs

credit costs

Death and Disability insurance will generally be requested by your bank. In most cases, you will also need to take out job loss insurance. If the risk covered occurs, the insurance takes care of the reimbursement of all or part of the installments according to the terms of your contract. With equal guarantees, you can choose your insurance independently of the group insurance offered by the bank. Do not subscribe with your eyes closed. In most cases, those under 35 have an interest in not subscribing to their bank’s contract, whose rates vary between 0.35% and 0.50% of the capital borrowed. Some borrowers get up to 60% savings on the premium from a competing insurer.

 

Application fees

loan Application fees

They revolve around 1% of the borrowed capital, while generally being capped between 900 and 1,200 dollars. Also think about negotiating these booking fees. Whichever banker or credit broker you negotiate with, you can request a discount on these fees.

 

Guarantees

Guarantees

To ensure that you can repay your credit in the event of a problem, the bank will ask for guarantees. Their implementation may generate variable costs depending on the nature of the guarantee. In the case of the mortgage for example, recourse to the notary will be necessary, with additional costs variable depending on the amount of the transaction. If it is a surety company which guarantees for you, it will ask for a commission and a participation (partly returned at the end of the credit.) The advantage of the guarantee compared to the mortgage? It does not require a mortgage free hand in the event of premature sale, an operation the amount of which can sometimes amount to more than 800 dollars.

 

Our advice

in addition to allowing you to negotiate the rate of your credit, the Good Lenders brokers will help you reduce the bill on other items. They will also take care to protect you by negotiating essential flexibility points for you, such as postponing or adjusting the due date (in the event of unforeseen expenditure), and also the conditions provided for in the event of early repayment.

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