How to Get a Loan with Minimal Overpayment in 2025: What to Consider?

When choosing a loan, many people focus only on the interest rate. However, the total cost of the loan is more important: fees, mandatory insurance, and hidden charges can significantly increase the overpayment. For example, a loan with a low 10% interest rate but mandatory insurance of 5% of the loan amount may turn out to be more expensive than a 12% loan with no additional fees.

In this article, we will break down how to choose a truly beneficial loan in 2025 and minimize overpayment.

Why Do Banks Offer Lower Interest Rates Than Credit Organizations?

Credit organizations often attract clients with quick approvals and minimal requirements, but these loans tend to be more expensive. Banks, on the other hand, can afford lower rates because they have access to cheaper financing sources.

1. Banks attract deposits and international investments, reducing the cost of credit resources.
2. They conduct stricter borrower assessments, requiring collateral or proof of income, which lowers risks and allows for better rates.
3. Credit organizations compensate for high-risk borrowers (without documents or collateral) with higher interest rates – the difference can be 10-15% annually.

Example:

If you take a 1,000,000 AMD loan for 3 years:

1. At a bank with a 12% annual rate, the overpayment will be approximately 200,000 AMD.
2. At a credit organization with a 20% annual rate, the overpayment will be 350,000 AMD or more.

Conclusion: If you have the option to get a bank loan, it is always more cost-effective.

The Best Loan Types for Minimal Overpayment

1. Collateral Loans: The Lowest Interest Rates

A secured loan is the best option if you need a large amount at a low interest rate. You can use real estate, a car, or gold as collateral.

Benefits:

1. The lowest interest rate among all loan types (from 13.24% annually).
2. Large amounts – you can receive up to 80% of the collateral’s value.
3. Fast approval for gold-backed loans – within a few hours.

TOP-5 Most Favorable Gold-Backed Loans in 2025

Example:

Let’s say you have 50 grams of 999-fineness gold. You apply for a loan at Inecobank, where 1g is valued at 46,350 AMD.

1. Total collateral value: 2,317,500 AMD.
2. Annual interest rate: 14.93%.
3. Overpayment per year: ~345,000 AMD.
4. Total repayment amount: 2,662,500 AMD.

Thus, a secured loan is the best choice for obtaining large amounts with minimal overpayment.

2. Mortgages: How to Reduce Overpayment When Buying a Home

In 2025, Armenia has government mortgage support programs, making homeownership more affordable.

How to Get the Best Mortgage Terms?

1. Use government programs – rates start at 4.4% per year instead of the standard 10-12%.
2. Choose loans in AMD – foreign currency loans pose a risk due to exchange rate fluctuations.
3. Increase your down payment – a 20% down payment or more leads to lower interest rates.

The Best Mortgage Programs in 2025:

Mortgage Calculation Example:

If you take a 10,000,000 AMD mortgage for 20 years at 4.4% annually:

1. Monthly payment: 62,726 AMD.
2. Total payments over 20 years: 15,054,341 AMD.
3. Total overpayment: 5,054,341 AMD.

Even with a low rate, overpayment over 20 years is significant, so this should be considered when planning a budget.

3. Credit Cards and Interest-Free Loans

Using credit cards with a grace period can be a great alternative to traditional loans if used correctly.

Where to Find Cheap Credit Without Overpayments?

1. Choose cards with a grace period (15-60 days without interest).
2. Pay off the debt on time to avoid interest charges.
3. Use installment plans without extra fees from bank-affiliated stores.

Example:

If you need 500,000 AMD:

1. Taking a loan at 16% per year means an overpayment of 40,000 AMD over 12 months.
2. Using a credit card with a 60-day grace period and repaying on time – zero overpayment.

Thus, credit cards can be a great tool if used wisely. You can compare all Armenian bank credit cards and their conditions on our website in the "Credit Cards" section.

Top 2025 Loans Without Additional Fees:

Armenia’s Financial System in 2025: What You Need to Know

In 2025, loan conditions in Armenia are becoming more favorable. Banks are offering flexible terms, lowering rates, and simplifying approvals.

1. Government programs make mortgages more affordable.
2. Online platforms help compare loan conditions before applying.
3. Competition among banks reduces interest rates.

However, research shows that 70% of borrowers make decisions based on advertising, not considering cash withdrawal fees, account maintenance charges, and insurance fees. As a result, they end up paying much more than expected.

For example, a loan with a nominal 12% rate but a 0.5% monthly fee effectively turns into an 18% annual loan.

Conclusion: How to Choose the Best Loan?

The best loans are not the ones with the lowest interest rates, but those with no hidden fees and transparent conditions.

1. Credit cards with a grace period allow you to avoid interest if repaid on time.
2. Installment plans from reputable banks truly have no overpayments.

The difference between a smart choice and an impulsive decision can cost you several salaries!

Be attentive and analyze all conditions before taking a loan. Choosing a loan is not just about interest rates, but about seeing the full picture.

On AFM, you can compare all available loans, calculate interest, and make the right choice!