The most popular services provided by the commercial bank – consumer loan to individuals. And no wonder, because this type of loan is able to bring a good income to the financial institutions of our country. This is due to significant interest rates. So for a year, taking into account commissions and interest, the consumer will overpay about 40% of the credit authority.
Consumer loans to individuals: some characteristics
Market – individuals, payroll workers. The loan is provided only to wage workers. The loan depends on the person’s wages. Although the bank’s ad says you can theoretically get a significant amount of cash, in practice the loan is calculated only on the basis of your income level. The maximum amount of the loan is in principle about three salaries. Subsequently, if the payer fulfills his obligations in time, the bank may raise the limit to six average monthly salaries of the debtor.
The interest rate of consumer credit to individuals is significantly higher than other credit products. This is related to high credit risks: in fact, this type of loan is not collateralized. In addition, there is always the risk of dismissing a person from work and, consequently, of delaying payments. Such a concept as low consumer credit is a marketing move of financial companies. It will be unprofitable for the bank at low rates.
It is advisable to choose a creditor bank and read the terms of the loan. Sometimes you hear only one interest rate in your ad, but in fact there are still monthly commissions, insurance, and more.
Does the bank control the borrower when applying for a loan?
Each bank is hedged and tries to reduce its risks. Therefore, when borrowers apply for consumer credit to individuals, the bank carries out a comprehensive check.
The first check is the borrower through the Credit History Bureau (BKI). If you have already lent, BCI will issue repayment information to the bank upon request and will also create your rating. The Bank’s further lending decisions to a potential borrower depend on this information.
Each bank has a different approach to credit history: some take information over the last two years, others take five years.
Separately, I would like to note a consumer loan without a profit and loss statement. The amount in these loans is much lower than for certificates and the rates are much higher. Therefore, it is recommended to use such a loan only in extreme cases.
Points to consider for potential borrowers
- You have to think about it carefully before going on a loan. You should not take it without special needs.
- Please note that it is convenient to repay a loan that does not exceed 25% of your net income. In this case, the debtor will have free money earmarked for other needs.
- You should not borrow “in the eye”, because a downward pay will lead to delinquency in the loan.
- Keep track of your credit history because you never know what can happen in your life, so take care of the future.