Seven questions to ask before you sign
Short answer
The most useful questions before signing are those whose answer can be compared with a document: what is the total amount payable, what is the APR, which fees exist, what happens on late payment and on early repayment.
The price questions
How much will I repay in total? What is the APR and what goes into it? Is the interest rate fixed or variable, and against which index? Are there processing, drawdown, management or transfer fees, and in which document are they described?
The questions about what can go wrong
What is owed on late payment and how is it calculated? After how many missed instalments does the loan become immediately due? Is there a penalty clause, and how does it relate to the total cost of the credit?
The exit questions
Can I repay early and what gets reduced? Is insurance mandatory with the loan, who is the beneficiary, and is the premium included in the APR? Will I receive the contract and the repayment schedule on a durable medium?
Frequently asked questions
- How do I verify the answers?
- Every answer is looked up in the standard form, the contract, the general terms or the tariff. An answer that is not confirmed by a document is not a term of the credit.
- Is insurance with the loan mandatory?
- It depends on the product. If it is a condition of the lending, its cost is part of the price of the credit and that matters when comparing offers.
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