By issuing a loan, a person gets the opportunity to purchase the thing he needs, even if he currently does not have his own funds for it. However, it should always be remembered that for each borrowed ruble the lender will have to pay interest. So the borrower pays for giving him money at the right moment for him. And not all loans are beneficial to the consumer. In this article we will tell you about 5 types of loan, which it is better not to take.
Credit for the purchase of status things
Many people have a need to demonstrate to others that level of success, which they were able to achieve. You can do this by buying yourself prestigious expensive watches, clothes, mobile phones, cars. Well, if your income allows you to easily purchase, for example, premium iPhone XS Max for 117 thousand rubles.
But if your salary is only 30,000 per month? Indeed, in this case, all your money goes to buy food, clothing, pay for utilities. Of course, you are also pleased to show others your success. But you can do this only by buying an iPhone XS Max on credit.
But even if you apply for the so-called interest-free installment plan “0-0-12” for the purchase of the latest iPhone model, you will have to pay almost 10,000 monthly from your pocket within the next year. And this, if the bank does not force you to issue insurance for the goods or other paid services. For a whole year, for urgent needs, you will no longer have 30,000 rubles, but only 20,000. It is possible that a constant lack of funds will force you to take some more credit.
What do you get in return for money problems?
Your friends will stop admiring your iPhone in about a week. A year later, when you pay off a loan, Apple will release a new model. That it will now be prestigious and status. And your phone will lose about 30% of its value. Last year’s model will be evidence that you don’t have enough money for the “new iPhone”.
So don’t get into debt. You will not raise your status with an expensive smartphone alone. It would be much more reasonable to buy the device for which there is really enough money . The iPhone XS is not a necessity. You can live without it.
Loan to repay a current loan
If the borrower does not have enough funds to make payments on the current loan in time, then applying for a new loan in another bank will not be a good way out for him. Payments on loans, as a rule, are annuity (equal). In this case, at first, a large part of the payment made goes to repay the interest on the loan, and not to cover the loan itself. Accordingly, the payer in the initial period of payment of the loan brings income to the bank, and closes its loan only at a minimum.
If the new bank gives you a loan to cover the old one, then everything will start over. At first, you will mainly pay interest again, only slightly reducing the amount of your loan. Lenders will get real benefits.
In addition, if the borrower had problems with payment, a simple transition to a new financial organization would not solve them. The way out here is to issue a deferment of the loan and take measures to increase your income (selling unnecessary things, additional part-time work).
Credit just in case
It often happens that bank managers call customers themselves and offer to issue a credit card. When issuing a loan you are told that you can not use the card, and then you will not have to pay interest on the loan. Just put the card in your wallet. So, just in case.
However, experience suggests that the situation in most cases will evolve in a different scenario. There are always many temptations around you, but there is not enough money for everything. And here are very close to the means for which you can buy something that “has long been very desirable.” For example, a 105-inch TV that impressed you.
But the feeling of delight that has arisen after buying a TV will not fill you forever. But the real monthly income will decrease. On the amount of interest that you will pay the bank for the money provided.
To always have enough money to buy the necessary things , avoid spontaneous unplanned expenses . And loans that you offer to take on “just in case.”
High interest rate loans
When you choose clothes for yourself, you won’t buy a jacket for 12,000 rubles, if you sell the same store at a nearby store, but for 10,000. With loans exactly the same. A loan is money that you buy from a bank. Interest is a fee for a loan. The lower the interest rate, the more profitable the loan is for you. And you need to take a loan not “where they give,” but where it is cheaper.
The bank loans are issued at 14 – 24% per annum. But there are also microfinance organizations! They give the same loans at 360 – 550% per annum (25 – 40 times more expensive!). Just the procedure of registration in these companies is easier.
The most logical behavior for the consumer will be to search for a loan with a minimum interest rate . It is better to refuse microloans from MFIs, or to contact them only as a last resort. When money is badly needed, but banks refused. And to take in these organizations you need as little money as possible for the shortest possible time.
Credits with small text terms
An honest loan is when the effective interest rate on a loan and its total cost are indicated in large type in the first paragraph of the loan agreement.
But not all loan agreements are the same. There are also those where the important conditions for the client overpayment are printed in small print after the “asterisk” in the footnote. All conditions, as required by law, are indicated. But to get acquainted with them, you will need to bring a magnifying glass.
Such contracts are most often offered by bank employees for signature to customers in shopping centers when they buy home appliances on credit. The use of fine print in a contract is usually based on the desire to save paper. And so that the client does not strain his eyes and does not spoil his eyes, a pretty girl will tell him “everything herself”.
But if the borrower reads the text himself, he will find out that, in addition to a fairly attractive rate of 14.5% per annum, the bank will charge him for maintaining a credit account (1.6% monthly). Specified here will be the effective interest rate (about 60% per annum).
At the request of the law (but in hard-to-read small letters), “voluntary” insurance of the goods or the health of the borrower, the commission for cash withdrawal, for accepting payment through the terminal, payment for SMS informing services may be prescribed. In general, everything that the bank receives from you money besides interest on the loan. But, preferably, without your knowledge.