“After a month’s work, spend one day. Gradually becoming a statue of a running man, “rapulates Lemo, in his own name, Athan Santos, in the famous Prago Union” The Mind March “. But what about when the paycheck is gone and the next few days are missing. Who will pay for food, gasoline or rent? This is what non-banking institutions think, offering people in similar difficulties loans immediately, which you may know as pre-pay loans. Are you attracted by the first free loan and free of charge? Why do you prefer to avoid it?
With financial literacy in the Czech Republic has long been a scorpion, but perhaps anyone who sees the text “the first loan free of charge”, says that something stinks. And it stinks. What they hope to catch all of them around the flying bee, a lot of people, unfortunately, live from paycheck to pay, and have no money to lose, and when a car, washing machine or pipe breaks, they find they lack the means to pay. family or friends, but where will the others go?
A simple solution is the so-called loan immediately. This is a loan with a short maturity, usually set to 30 days. Therefore, the loan is also called “before payout”. It is free and free of charge if you can pay it off the next wage. Otherwise…
Pay the most attention to so-called “private investors”. Often these are ordinary fraudsters. Find on the Internet the name of the person who asked you if he appears on any blacklist. Observe his behavior and behavior. Under no circumstances should you give anyone money in advance.
Klara’s husband delivers building materials in his van while she cares for a baby at home. Unfortunately, the last month he wasn’t doing well, but after the weekend he was in a big deal. On Friday evening Klara asked him to go to the small shop for diapers. When he tried to start the car, he found the van wasn’t moving. He immediately called his friend, who came to see everything. The car is supposed to repair him by Monday, but it will cost 5,000. He and Klara are counting every crown like that, and sudden expense surprises them unprepared. If a husband came out with a deal, they would have money within three weeks. Without a car, however, nothing can do and a friend can not afford to repair the car in the workshop black. What with this?
Fasting for money on Friday night is no win. But sometimes you just get into such a situation. He swallows pride and calls all friends and friends. If they don’t, they’ll try to call the bank. It is already closed or the loan would be resolved on Monday at the earliest. Advertising on non-bank loans is still bombarding us on the Internet and on TV. There’s no doubt that they look tempting. Everyone would like to believe that if he needs to be borrowed without interest and on his hand. But it’s a bit of a catch.
Creditworthiness is the ability of a client to repay a loan without any problems. For banks, this is absolutely essential for lending. Because of this, they require applicants to prove their income and track their payment discipline.
Neither chicken nor chicken. There is a reason why non-banking institutions lend without asking and right away. Unlike banks, they are not sufficiently interested in the client’s creditworthiness. Or, they are interested, because their target group is people who, for some reason, cannot take out a loan from a bank. Their business is based on the fact that the borrower will not be able to pay for some reason and will have to “shed” the sharp fees, which have already put a lot of people on the blades. that something could happen by chance and could be among those who reached for the bottom of the credit, they might not even think of a positive comment by the institution on the website, motivating others to take credit.
Non-banknotes rely on these former clients to return to them and this time it won’t be free. Once they turn to them again with the confidence of fair play, they get a credit with incredible interest and APR. Just a few minutes on the internet and we found loans where the APR reached up to 2,000% and the interest rate not mentioned here was 150%. Is it crazy? Yes. Yet these companies profit and our little pond is doing very well.
APR = annual percentage rate of charge. When we translate it into Czech, it is a percentage of the amount owed that you will issue for all the associated costs for one year. For example, management fees, administration fees, and possible insurance. It allows to accurately evaluate the profitability or disadvantage of a particular loan and serves for exact comparison of loans.
An unnamed non-bank institution offers a loan of CZK 10,000 for 3 months with a monthly payment of CZK 5,333. Thus, the consumer will collect CZK 16,000. The APR equals 1,791%. In comparison, the banking institution offers the same amount with a monthly payment of CZK 3,417. The APR is only 16.07% and the client pays together CZK 10,251.
Klara has found a non-bank institution on the internet that offered money in five minutes. My husband didn’t like it, but he didn’t see another way out. So the couple decided to take the risk and take the loan. In a quarter of an hour, they had already called a friend to come to repair the van. Everything went well, and Klara was happy that the problem was solved. My husband left the van on Monday and Klara threw the loan.
What to think about before you apply for a loan
Do you really need a loan? If it is a loan that you drown in vacation or for Christmas gifts, you definitely do not have to close it. It is always better to live without debt.
Can’t the situation be dealt with differently? Sometimes it seems that you just have to do it. But Klara and her husband did not actually have to take the loan. They would lose money from one business, but they wouldn’t get into a debt trap. If Klara’s husband didn’t want to take the business and found a short job to earn a car repair, he wouldn’t have to borrow the loan.
Who do you borrow with? Do you know the institution, have you gained experience with other clients, do you have an idea of its ethical code and other services offered? Rather, first compare online loans and find the best option for yourself than to take credit from the first company you encounter.
Do you borrow the right amount? Never take more than you really need.
Can you repay the loan? Make sure you don’t have monthly installment issues. Don’t take credit for a previous loan. If you couldn’t repay the first one, most likely you won’t be able to repay the next one. You better try consolidating, you can save up to 50% in monthly installments.
What is the APR and the interest rate? Do you know how much you will overpay the original loan amount? Do you know the penalties for late repayment? Becoming another unpredictable event, will you still be able to repay the debt without any problems? Won’t you miss the money elsewhere?
Do you understand everything in the contract? The contract should include the following: loan amount, interest rate, APR, amount of monthly installment, what type of loan it is, under what circumstances the sanctions will start, etc. You should understand everything before signing and the institution that submitted it should be willing and able to explain everything.
Three weeks later, Klara wanted to pay her credit from her husband’s paycheck. But she was nowhere. The employer has been late with the payment, but is supposed to resolve it within a week. Didn’t solve. Klara tried to stop half of her household, including a baby carriage, but only got 3,000 CZK. As the couple failed to repay the loan by the deadline, huge penalties began to rise. Carolina panicked and took another loan to avoid buyers of penalties for defaulting the first loan. The pair got into a debt spiral that had to be resolved by insolvency.