More and more credit institutions are using this type of argument which consists of postponing the first monthly payments of a loan . Concretely: after your credit application is accepted you receive the funds by check or by transfer, but the monthly credit payments do not really start until 2 or 3 months later.
This type of proposition may be convenient for some consumers who do not wish to start repaying a loan immediately. Usually the reasons are simple:
- you have a loan that ends in the following 2 or 3 months and you do not want to have 2 monthly payments at the same time
- you expect an inflow of money or an increase in your income.
Whether you take advantage of this offer with a personal loan or a revolving credit, the result is the same: you have additional fees. The fact of not having a monthly payment does not prevent the calculation of the agios: the total cost of the credit is always higher compared to an operation without postponement.
You borrow an amount of 2000 us dollars, but without repayment for 2 months. The revolving credit rate is 16.8% * (i.e. 1.40 per month).
The first month after the transfer of funds you have no monthly payment, but the calculated premiums are 28 us dollars (2000 x 1.40%).
The second month you still have no monthly payment, but the premiums are 29.39 us dollars (2028 x 1.40%). It is therefore a total of 56.39 us dollars that you repay in addition as agios for the postponement of the 2 monthly payments. This will be added to your total costs ...
Note that the APR of revolving credit is given as an example and does not necessarily correspond to a market offer.
The deferral of the monthly payment at the beginning of the loan being relatively expensive, only use this possibility when it presents a real advantage for you. Do not forget that the higher the amount borrowed, the more the premiums generated will be important ...
On the other hand, if you find an offer indicating both 2 or 3 months without paying anything and an APR of 0 over the same period, you can go without hesitation ... But these double offers are rather rare!