Things to keep in mind when borrowing money to avoid pressure from interest rates.

Borrowing is a perfectly legitimate need for individuals and households to finance investment and consumption in their lives. However, choosing the right financial institution to avoid incurring excessive costs is not something everyone understands.

According to Dr. Nguyen Thi Nhu Quynh, lecturer at the Finance Faculty of the Ho Chi Minh City University of Banking, before borrowing, people need to clearly understand the fees involved in taking out loans, including:

- Interest on the loan, paid periodically each month, is calculated based on the loan's interest rate.

- Early repayment fee if the customer wishes to settle the loan early.

- Other fees and charges such as notarization fees for collateral, property valuation fees, etc.

"Depending on the purpose and amount of the loan, you should do some preliminary research with friends and relatives about the financial institutions they have worked with before to estimate the specific costs of taking out the loan. In addition, gathering more information about the financial institution you are interested in is also advisable at this stage. You need to create a list of financial institutions that you believe are suitable for your needs," Ms. Quynh said.

According to experts, most financial institutions currently offer preferential loan packages with fixed interest rates during the initial borrowing period, after which the interest rate will be floating, based on the deposit rate plus a margin required by the bank. In this case, you also need to pay attention to the interest rate after the preferential period and any penalty fees if you repay the loan early.

For example, bank A offers an interest rate of 6% fixed for the first 6 months, after which the interest rate will float according to the formula: 13-month savings interest rate plus a margin, for example, 3%. Therefore, you understand that the interest rate for the first 6 months from the time of receiving the loan is 6%. After that, the loan interest rate will be the 12-month savings interest rate plus a margin of 3%. If we assume the 13-month deposit interest rate is 5%, then the interest rate is 8% per year.

Furthermore, Dr. Nguyen Thi Nhu Quynh suggests that borrowers should also pay attention to penalty fees. Typically, financial institutions calculate penalty fees based on the amount of money repaid early. The earlier you repay, the higher the penalty fee will be. The penalty fee is calculated on the amount you repay to the financial institution before the due date.

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Source: https://laodong.vn/kinh-doanh/nhung-luu-y-khi-vay-von-de-tranh-ap-luc-boi-lai-suat-1347650.ldo