Currently, loan institutions are increasingly offering their clients various types of promotional solutions. Obviously, the most common variant of this type of promotion is famous loans for free, ie an offer dedicated to new clients, in which the basic costs of loan, ie APRC, are reduced to 0%. In fact, this means no loan financing costs for the client. A promotional online loan for an account is undoubtedly an extremely attractive solution for customers looking for quick and cheap loan financing. However, you should not equate the easy availability of solutions such as an online loan to your account at 0% APR with no lender requirements for the customer.
It is worth remembering that, as the name suggests, an online loan for an account at 0% APR is just part of the promotional offer, not the standard offer of a given lender. This fact has significant formal and financial consequences for the client. As is well known, each promotion has its rules. It is no different in the case of loans with a Real Annual Interest Rate of 0%. In this case, the key condition of the regulations will always be the obligation to repay the loan within the period provided for in the contract. If the customer fails to do so, it will simply mean breaking the terms of the promotion. In this case, most likely, the promotional terms will automatically cease to apply, which may mean the need to repay the loan in accordance with the standard cost table as well as any statutory penalty interest.
What is worth knowing about online promotional loans?
Although solutions such as online loans on account are often referred to as “loans for free”, it should be post in mind that this is a colloquial term that does not completely reflect the full mechanism of this segment of loan companies offer. A free loan really means a loan at the APRC at 0%. The APRC, on the other hand, is an indicator by definition relating to the underlying cost of the loan, and not to any possible additional costs.
What does this mean from the customer’s perspective? For example, if a given lender offers the option of extending the duration of the loan in its offer, using this option will require a one-time commission also for the first promotional loan. In this way, the basic terms of the promotion are not canceled because the extension commission is not included in the APRC. The same will also apply, for example, to the commission for paying out a loan with a check, although of course in this case it is a much less important issue, since this type of fee is typically between USD 4 and USD 10.
How to check the lender’s reliability?
Of course, when using non-bank loan offer, it is worth applying basic security principles. The terms “loan institution” and “parabank” by no means refer to the same category of entities, although they are used interchangeably in everyday language and even in the press language. A loan institution is an entity appearing in the Register of Loan Institutions at the PFSA. The lending sector itself is subject to control by the Office of Competition and Consumer Protection. In the case of the so-called parabanks or private lenders, the client will very often be dealing with a sector that is in fact outside the scope of any regulations, which can be clearly seen in the Warning List, which has many loans Parabanks.
In addition, always read the signed documentation, of course.