HERE AND BEYOND
All you wanted to know about loan refinancing (part 3)
Media Room

Revealing the problems with consumer loans

During the previous days we talked about the idea of Bizo and Hypo campaign and about the benefits of Ameriabank’s loan refinancing campaign for SMEs. Today Avetik Avetisyan, “Yeritasardakan” Branch Manager, Ameriabank CJSC, will tell us about how we overpay instead of saving money and what to do if your main and only concern is not to mix up loan repayment dates.

Mr. Avetisyan, many people have outstanding consumer loans they had received earlier. Since then everything (both our income and lending terms) has changed. Is it high time to think about refinancing of loans?

Perhaps consumer loans are the most demanded ones. Their variety is their distinctive feature. May be this is the reason why people get themselves many different loans in different banks and spend a lot of money on their servicing.

And get lost in loans…

The phrase “got lost in loans” is just about consumer loans since they have one more peculiarity: very often people take consumer loans on the run. When the loan is not a very big one, the only question a borrower asks is “How much shall I pay monthly?” If the borrower is ok with the sum of monthly payment, he or she takes the loan without paying attention to the interest rate, term of the loan, commissions and fees, etc. Meanwhile, since the amount of a consumer loan as a rule is not a very large one, additional expenses considerably increase the actual interest rate. For instance, the announced 18% plus the loan servicing fee turns into actual 20-25%. Several “small loans” of this kind are enough for the monthly repayments to take a considerable chunk out of family budget. Later on the client perhaps understands that he or she has made a mistake, but it is too late then. Some clients do not even give it a thought as long as the amount of monthly payments is not critical for them. Still, why pay 10% if we can spend only 5% of monthly income on repayment of loan? Besides, today we should value each saved dram.

Is it possible to save the situation through refinancing?

Yes, what we offer today to our potential clients is very favorable in all terms. I will restate what my colleagues said: if a borrower refinances a loan at Ameriabank, the bank bears collateral appraisal (if any), notarization, and cadaster registration costs and the client does not pay loan disbursement and servicing fees. We offer highly competitive interest rates: 14% for USD loans, 17% for AMD loans and 12% for loans in euros. Loans are issued for an up to 7 years’ term. Our offer covers consumer loans secured by real estate or vehicle, non-revolving credit lines and overdrafts.

For those who have several loans in different banks with different interest rates and terms our offer is a good opportunity to save money, time and nerves. Note that we refinance only loans which have been properly repaid for at least a year. We reduce the amount of monthly payments by increasing the loan term. If the loan was taken at a higher interest rate, the amount of monthly payments becomes even smaller due to reduction of interest rate. So instead of repaying loans in 5 banks the borrower pays only once in a month at one bank, which is, of course, more convenient. The financial resources which become available due to refinancing may be used for other purposes which were unaffordable before.

Thank you for your clarifications, Mr. Avetisyan.

Tomorrow will be the final part of our interview about loan refinancing. We will talk about mortgage loans. You will learn whether or not it is worth going through the whole procedure of mortgage lending. Stay with us.

Source: tert.am

Updated 09.06.2016, 14:59
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