Best Interest Rates On Loans In Ghana

Best Interest Rates On Loans In Ghana

Interest rates on loans in Ghana varies very widely depending on the financial institution that is offering the loans. Even in an individual financial institution, the interest charged on loans differs by the type of loan given. Loans for SMSs have different interest rates from interest rates on personal loans. Therefore, clearly, determining the best interest rates can be very challenging. However, we provide the clues to the best interest rates on loans below.

But first, financial institutions determine the interest they charge on loans based on various factors. One of such factors is policy rates by the regulator, which is the rate the central bank loans money to the banks when the need arises. Other factors include the treasury bill rates, inflation, interest on deposits, profit margins etc. A variation in any one of the factors by any bank would make the interest rates on loans being charged differ from others. According to the bank of Ghana (bog.gov.gh), the average interest of commercial banks in the country is 31.4% as at October 2022. This means that there are some banks which have their interest on loans less than the average while other banks have their interest above the average.

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A challenge for determining customers looking for the best loan deal is also the fact that some lower rates being quoted can end up giving a lower loan amount disbursed due to the service charges and insurance premium on loans. In order to achieve the best loan deal, the following criteria are provided.

1. Compare deductions for the same period for the same requested amount. Instead of comparing interest on loans offered by financial institutions, it is better to compare the deductions that will be made. The reason is that, no matter the interest being charged, the end result is the repayment deductions that will be made by the institution.

2. Secondly, compare the final loan amount to be disbursed. This factor must be looked at with the first factor in mind. A loan company can offer the least repayment deduction but could be giving you a lower disbursed amount due to higher processing and insurance fees.

In conclusion, customers who want the best interest on loans in Ghana should stop asking for rates or percentages. They should rather focus on comparing repayment deductions and disbursement amount.

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