When it comes to requesting a loan from the bank, a financial institution or a cashier, we have heard that the key point to which we must pay attention is the TEA, which means the Annual Effective Rate, or in other words, how much interest we will be charged for the money they are giving us.
But did you know that a bank that offers a lower ASD may prove to be more expensive than another?
Although interest is one of the main costs
This happens because the ASD is not the only thing you will have to pay when you borrow money. Although interest is one of the main costs, there are some additional charges that have to do with commissions, insurance, shipments of account statements, among others.
Since not all of them will have the same value
These charges will vary depending on the financial institution you choose, since not all of them will have the same value. For this reason it is possible that a bank charges you very low interest, but its commissions and insurance expenses are higher, while another charges normal interest, and its additional charges are cheaper. Which means the Annual Effective Rate, or in other words, how much interest we will be charged for the money they are giving us.
To find the ideal option
So, to find the ideal option, it is necessary to look beyond the TEA, and look for how much the TCEA or Annual Effective Cost Rate equals, since this percentage represents both interest and additional expenses, that is, it shows you what you will truly pay for the credit you are looking for.
It may sound complicated, but in reality all financial institutions offer this information and explain it in detail. In addition, you can compare them all using the comparator.
Remember, the more informed you are, the better decisions you will make.