Credit costs - basic information

Service Business

Entrepreneurs who are looking for financial support for their business most often choose loans. They make it possible to make all the necessary purchases or to meet the needs whose value exceeds the current revenues of the enterprise. In addition, you can apply for them both in the case of short and long financial needs of the enterprise. However, before deciding to take out a loan, it is worth considering what the loan costs are.

Credit costs - components

When analyzing long-term loans, the APRC - Actual Annual Interest Rate is also important. It is a broader measure that also applies to other costs related to the loan, and therefore goes beyond the nominal interest rate.

The loan costs consist of several important elements:

  • Interest - the basic component of the loan. Each bank sets the interest rate on the loan on an annual basis, and its official value may not exceed four times the lombard rate, which is decided by the National Bank of Poland.

  • Additional costs - sums that are individual for individual banks. They may include, for example, a commission for granting a loan. It is collected when the bank pays the loan to its customer.The amount of the fee may be added to the first installment or used for all installments and included in the sums of monthly repayments. Another important cost is the preparation fee that you pay for the loan application and you usually cannot count on its return.

  • Loan insurance cost - is a component that does not appear in all loans. Its presence depends on the bank's determination as it is a form of collateral for a financial institution. However, the offer of such a benefit is determined individually.


The bank may offer the borrower an interest rate reduction on the condition that he takes out insurance for his loan. However, it is not always worth deciding on it, as the repayment price may increase and become greater than the profits from such an offer.

Factors influencing the cost of the loan

A large number of factors affect the overall cost of a loan. One of the basic ones is the collateral that the borrower can provide. The bank pays special attention to them because it guarantees the recovery of the loan granted in the event that the client loses its ability to repay it.

Another of the main factors is the credibility of the loan applicant. He must provide the bank with all the necessary documents on the basis of which the risk of lending a loan to a given person is estimated. The elements of the analysis include - among others - credit history and client's income.

In addition, several additional factors are taken into account. These include, for example, the purpose for which the loan applicant would like to spend the money obtained, as well as the economic situation of the country. In this case, what matters are inflation, competition in the banking services market, unemployment and the level of interest rates.

In summary, a loan can be a rescue for the company or at least a good solution to immediate financial problems. However, before making a decision to contract it, it is worth comparing the offers of several banks. However, when you choose a specific financial institution, you still need to carefully look at the individual costs that make up the monthly repayment.