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- Try to find out as much as you can about how the loans work and all the terms and conditions that come with them, especially how the interest rates work.
- When it comes to online personal loans, people should be extra careful and read the fine print.
We are at a time when millions of Mexicans are looking for a loan online and millions of others have become fraudulent and usury as a result. The irony that some use to use when help is needed most is not lost immediately.
Ultimately, the safest thing to do is to learn to protect yourself and to know the rights that come with a person who purchases a loan.
Various sources have reported a surge in personal loan applications, no less as many banks announced the end of the payment extensions requested four months ago when most people hoped the COVID-19 pandemic is rolled into one Month over.
However, this did not happen. In case you need it, here are some steps and precautionary measures to be taken before you can access a loan online.
Photo: Steve Johnson via Unsplash
First, learn the ABC of credit
Try to find out as much as you can about how the loans work and all the terms and conditions that come with them, especially how the interest rates work. So that you don’t feel lost, read these terms.
The destination of the loan: Loans are like colors; There are for all kinds and all purposes. The goal of a mortgage loan is real estate while that of a personal loan, as the name suggests, is for personal use and can be used by anyone without being accountable to the bank.
The risk assumed by the bank: Depending on the destination of the loan, there is a risk that the bank will get your money back. If it is a house, the risk is lower as the bank can get the property back and sell it at any time and therefore charge a lower interest rate. When it comes to a personal loan, the bank takes a higher risk because it cannot get back the property the person bought, and therefore the bank charges a higher interest rate.
The depreciation table: It is a document that the bank gives to the customer who has taken out a loan. This table details each payment that the customer will have to make throughout the life of the loan, provided it is never in default. There are people who get very nervous believing that the bank can change the monthly payments at will, but it is not true that they can because they give you the table for that.
Term: the length of time in which you pay your credit.
Pension, insurance and commissions: These are all the additional costs that you pay with your balance. Unemployment and mortality insurance are usually included. The bank can also charge you an annuity and a participation fee.
CAT: This is most important as it is the total percentage of the loan amount that the bank will charge you. The CAT reports the full cost of the loan including the interest rate and all related costs of the loan as we discussed in the previous point.
What if you don’t pay on time?:: This is called “the consequences” and everyone should be aware of this before signing a loan agreement. In banks, these consequences include reporting to credit information centers such as Buró and Círculo de Crédito, as well as selling the debt to a debt collection agency that insists on collecting the money, reaching an agreement, or filing a lawsuit; However, the latter only happens in the latter cases.
Now that this is online personal loans, people should be extra careful and read the fine print as not all institutions are government vetted and may not play by the same rules as a financial institution. Institutions with dubious reputations, but with few credit requirements, could harass people for not paying on time, using illegal printing techniques, or changing terms and conditions to keep the customer happy with their payments. They could also charge usurious interest, taking advantage of people’s needs and urgency.
What Should You Look For When Getting A Loan Online?
1. In the interest
It is necessary to compare in order not to accept an interest rate bordering on usury, that is, an interest rate that is too high and unfair. To do this, you need to access a personal credit simulator that compares several options so that you can get an idea of the rates and know that you are paying just enough.
If all banks charge 1.5% interest on a monthly average and another institution charges you 7%, they are clearly taking advantage of this.
In any case, usury is punished in Mexico. So if a company charges above average interest with the excuse that it does not consider the history or carries out the procedure on the same day, this can be reported to the authorities.
There are quite a number of legal lending institutions willing to lend money to people with poor records. So you don’t need to rest until you find a loan that suits you.
2. Where the lender is legal
That said, it’s certified by the National Banking and Securities Commission and the CONDUSEF. Check their pages to make sure they are properly registered to lend money and generate interest so that you can make sure everything is working as it should.
It should be noted that having a company that has a website that looks good does not mean that it is legal. Don’t let a good facade fool you.
Verify the identity and legitimate registration of the lender, which in the case of Popular Financial Societies (Sofipos) meets the requirements of the National Banking and Securities Commission (CNBV). Www.cnbv.gob.mx and in the case of Unregulated Multipurpose Financial Firms (Sofomes ENR), verify that they comply with all of the records requested by Condusef www.condusef.gob.mx.
The age of the company and the opinions of other customers also say a lot about a company. Make sure to check them out.
Do not pass on your data in any form on the Internet. Check that the page is secure, read about data processing guidelines, and make sure the padlock is on top. The information you provide on unsafe sites can be used to solicit fraudulent credit on your behalf.
If you are part of closed groups on social networks, don’t be afraid to ask for other people’s opinions on the pages where you want to apply for a loan.
Do not give money to a loan company if you can get a faster or higher amount. Some companies will ask you for money to investigate your situation, but this is always a lie. It is possible that you will pay and not see your money again.
Read the entire loan agreement before signing it, especially if it is a company you do not know. Check the amount of the loan, the term, the interest, the commissions. Thoroughly review the amortization table, and most importantly, check the terms of late payments. There are some legal institutions out there but they will try to change the terms in case you only need one day to pay. The interest rate and the term can even change. Keep alert.
If you are getting a loan from an overseas location, check that it is governed by Mexican law and that it is registered in Mexico.
Visit the Financial Firms Bureau (www.buro.gob.mx) to check other users’ reviews if the agency has found unfair terms in their contracts or if they have fines related to their services
After verifying these requirements, a person can take out a loan with confidence.
On the Bancompara blog, we talked about some websites that are reliable to apply for a loan online in case you want to save some time. However, always check the final loan agreement before signing it.
Also, anyone thinking of getting a personal loan online should compare interest rates and CATs as it is not time to lose money in bad conditions.
Finally, it is highly recommended that you review the reasons behind the need for a loan and double-check it. When it comes to resolving a bad phase or seizing a great investment opportunity, this is a good decision. If it’s a luxury or personal taste, this may not be the best time to do it, especially in the particular work staggering situation of COVID-19.
Carefully review your finances, compare and make the best decision.